INNOVATION MANAGEMENT & ENTREPRENEURSHIP

Subject Code: 107758(Open to all branches)

UNIT- IV: Entrepreneurship CO4

Who is an entrepreneur? Introduction to entrepreneurship, Role of Entrepreneur, Characteristics of
an entrepreneur; Factors affecting entrepreneurial growth – Social, cultural, personality factors,
psychological and Social Factors. Impact of entrepreneurship for sustainable development,
Entrepreneurship Development Programme- Objectives of EDP, Types of EDP, Stages of EDP,
Enterprise Launching Formalities-Procedure, Planning your Enterprise, Elements of planning,
Business plan in a nutshell, Sources of help for Entrepreneurs.

CO4: Applying leadership principles and to work in an interdisciplinary environment through

different entrepreneurial strategies.
 UNIT- IV: ENTREPRENEURSHIP
Syllabus

Who is an entrepreneur? Introduction to entrepreneurship, Role of Entrepreneur, Characteristics of an

entrepreneur; Factors affecting entrepreneurial growth – Social, cultural, personality factors, psychological
and Social Factors. Impact of entrepreneurship for sustainable development
________________________________________________________________________________________

WHO IS AN ENTREPRENEUR?

An entrepreneur is someone who has an idea and who works to create a product or service that people will
buy, as well as an organization to support that effort. An entrepreneur takes on most of the risk and initiative
for their new business and is often seen as a visionary or innovator.

Entrepreneurs are business people who can detect and sense the availability of business opportunities in
any given scenario. They will utilize these opportunities to create new products by employing new
production methods in different markets. They will also function in different ways by using various resources
who will give them profit. It is important to note that although most entrepreneurial businesses start small,
the owners of such businesses need not be small scale owners. They could in fact be big business owners,
who first try and test the waters before investing big time in the business. Small business owners dread risk,
but successful entrepreneurs are very innovative and know how to operate profitably in a business
environment, even if the risk is very high.

In fact, innovation is the life blood of any kind of entrepreneurs; this is one of the tools that helps them gain
an advantage over established players in the market. Entrepreneurs are, thus, defined as ―individuals or
groups of individuals who carry out entrepreneurship activities that are based on their innovative
approaches to solving real-world problems‖.

INTRODUCTION TO 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
businessmen to develop new form of business organization and new business activities catering to the
changing needs of the society. The liberalization of cultural rigidities are mainly due to this new product
‗entrepreneurship. ‘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
What is Entrepreneurship?

There are many meanings of the term ‗entrepreneurship.

Entrepreneurship is a system of operating business in which opportunities existing within the scope of
a market are exploited. Self-employment necessitates that any available opportunities within the
economic system should be utilized in the creation and functioning of new organizations. A potential
entrepreneur should show the interest to seek out investment opportunities in the market, so that they
can run the enterprise successfully based on the identifiable opportunities. Thus, going through the
above responsibilities of an entrepreneur, the term entrepreneurship has been finally defined as a
function which covers multiple functions such as:
• Building organizations.

• Providing self-employment

• Utilization of available resources

• Innovation applied to the novel concept

• Bringing together multiple factors of production in a tangible manner.

• Identifying and exploiting business opportunities within the available market.

Types of Entrepreneurs:
Based on their working relationship with the business environment they are functioning in, various
types of entrepreneurs can be found. The chief categories are these four types of entrepreneurs, i.e.
 Innovative entrepreneurs,
 Imitating Entrepreneurs,
 Fabian Entrepreneurs, and
 Drone Entrepreneurs.

Innovative Entrepreneurs: This type of an entrepreneur is more interested in introducing some new
ideas into the market, organization or in the nation. They are drawn towards innovations and invest a
lot of time and wealth in doing research and development.

Imitating Entrepreneurs: These are often disparagingly referred to as copy cats. They observe an
existing successful system and replicate it in a manner where all the deficiencies of the original
business model are addressed and all its efficiencies are retained. These entrepreneurs help to
improve an existing product or production process and can offer suggestions to enhance the use of
better technology.
Fabian Entrepreneurs: These are entrepreneurs that are very careful in their approaches and
cautious in adopting any changes. They are not prone to sudden decisions and try to shy away from
any innovations or change that doesn‘t fit their narrative.

Drone Entrepreneurs: These are entrepreneurs who do not like a change. They are considered as
‗old school‘. They want to do business in their own traditional or orthodox methods of production
and systems. Such people attach pride and tradition to even outdated methods of doing business.
 ROLES OF AN ENTREPRENEUR:

Entrepreneurs fulfill the following three dominant roles:

 Economic Change

 Social Change

 Technological Change

These are referred to as behavioral roles. All entrepreneurs have these common characteristics and
decide to become an entrepreneur due to the factors or circumstances in their lives which made them
think the way they do. To do their work effectively and operate a successful business, these
entrepreneurs should perform certain roles. These roles are the same as the basic managerial roles.

ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT

The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering
economic growth and development. Entrepreneurship is one of the most important input in the
economic development of a country. The entrepreneur acts as a trigger head to give spark to economic
activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial
sector of a country but also in the development of farm and service sector.
The major roles played by an entrepreneur in the economic development of an economy is discussed
in a systematic and orderly manner as follows.

(1) Promotes Capital Formation:

Entrepreneurs promote capital formation by mobilizing the idle savings of public. They employ their own
as well as borrowed resources for setting up their enterprises. Such type of entrepreneurial
activities leads to value addition and creation of wealth, which is very essential for the industrial and
economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic problem
of underdeveloped nations. With the setting up.of more and more units by entrepreneurs, both on small
and large-scale numerous job opportunities are created for others. As time passes, these
enterprises grow, providing direct and indirect employment opportunities to many more. In this way,
entrepreneurs play an effective role in reducing the problem of unemployment in the country which
in turn clears the path towards economic development of the nation.

(3) Promotes Balanced Regional Development:

Entrepreneurs help to remove regional disparities through setting up of industries in less developed and
backward areas. The growth of industries and business in these areas lead to a large number of public
benefits like road transport, health, education, entertainment, etc. Setting up of more industries lead
to more development of backward regions and thereby promotes balanced regional development.
(4) Reduces Concentration of Economic Power:
Economic power is the natural outcome of industrial and business activity. Industrial development
normally lead to concentration of economic power in the hands of a few individuals which results
in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to
be developed, which will help reduce the concentration of economic power amongst the population.
(5) Wealth Creation and Distribution:
It stimulates equitable redistribution of wealth and income in the interest of the country to more people
and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial activities
also generate more activities and give a multiplier effect in the economy.

(6) Increasing Gross National Product and Per Capita Income:

Entrepreneurs are always on the lookout for opportunities. They explore and exploit opportunities,,
encourage effective resource mobilization of capital and skill, bring in new products and services and
develops markets for growth of the economy. In this way, they help increasing gross national product
as well as per capita income of the people in a country. Increase in gross national product and
per capita income of the people in a country, is a sign of economic growth.
(7) Improvement in the Standard of Living:
Increase in the standard of living of the people is a characteristic feature of economic
development of the country. Entrepreneurs play a key role in increasing the standard of living of the
people by adopting latest innovations in the production of wide variety of goods and services in large
scale that too at a lower cost. This enables the people to avail better quality goods at lower prices wh ich
results in the improvement of their standard of living.
(8) Promotes Country's Export Trade:
Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of
economic development. They produce goods and services in large scale for the purpose earning huge
amount of foreign exchange from export in order to combat the import dues requirement. Hence import
substitution and export promotion ensure economic independence and development.
(9) Induces Backward and Forward Linkages:
Entrepreneurs like to work in an environment of change and try to maximize profits by innovation. When
an enterprise is established in accordance with the changing technology, it induces backward and
forward linkages which stimulate the process of economic development in the country.
(10) Facilitates Overall Development:
Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is
established, the process of industrialization is set in motion. This unit will generate demand for various
types of units required by it and there will be so many other units which require the output of this unit. This
leads to overall development of an area due to increase in demand and setting up of more and
more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an
environment of enthusiasm and conveying an impetus for overall development of the area.
 Functions of an Entrepreneur
An entrepreneur is expected to perform the following functions.

1. Risk Absorption
The entrepreneur assumes all possible risks of business. A business risk also involves the risk due to
the possibility of changes in the tastes of consumers, techniques of consumers, techniques of
production and new inventions. Such risks are not insurable. If they materialize, the entrepreneur has to
bear the loss himself. Thus, Risk-bearing or uncertainty-bearing still remains the most function of an
entrepreneur. An entrepreneur tries to reduce the uncertainties by his initiative, skill and good
judgment.
2. Formulate Strategic Business Decisions
The entrepreneur has to decide the nature and type of goods to be produced. He enters the particular
industry which offers from he best prospects and produces whatever commodities he thinks will pay
him the most employs those methods of production which seem to him the most profitable. He effects
suitable changes in the size of the business, its location techniques of production and does everything
that is needed for the development of his business.
3. Execute Managerial Functions
The entrepreneur performs the managerial functions though the managerial functions are different from
entrepreneurial functions. He formulates production plans, arranges finance, purchase, provides raw
material, facilities production, organizes sales and assumes the task of personnel management. In a
large establishment these management functions are delegated to the paid managerial personnel.
4. Adopt Innovation Function
An important function of an entrepreneur is being Innovational. He conceives the idea for the
improvement in the quality of production line. He considers the economic inability and technological
feasibility in bringing about improve quality. The introduction of different kinds of Electronic gadgets is
an example of such an innovation of new products. Innovation is an ongoing function rather than once
for all, or possibly intermittent activity.

CHARACTERISTICS OF ENTREPRENEUR

1. Facilitating Character
An entrepreneur must build a team, keep it motivated, and provide an environment for individual
growth and career development

2. Self-Confidence
Entrepreneurs must have belief in themselves and the ability to achieve their oils.

3. Work with Vision and Mission

An entrepreneur must be committed to the project with a time horizon of f vie to seven years. No
ninety- day wonders are allowed.

4. High Degree of Endurance

Success of an entrepreneur demands the ability to work long hours for sustain period of time

5. Trouble Shooting Nature

An entrepreneur must have an intense desire to complete task or solve a problem. Creativity is an
essential ingredient
6. Initiative and Enterprising Personality
An entrepreneur must have initiative, accepting personal responsibility for a ones, and above all make
good use of resources.

7. Goal Setter
An entrepreneur must be able to set challenging but realistic goals.

8. Calculated Risk-Taking Ability

An entrepreneur must be a moderate risk-taker and learn from any failures.

Distinguish Between The Terms Entrepreneur And Entrepreneurship:

Though both the terms entrepreneurs and entrepreneurship are almost similar the possess several
differentiating terms with them. The differences between the entrepreneurs and entrepreneurship are as
follows:

Entrepreneur Entrepreneurship

Entrepreneurship is the practice of starting new

An entrepreneur one who undertakes and
organizations, particularly new businesses
operates a new enterprise and assumes
generally in responses to identified
some accountability for the inherent risks.
opportunities.
Entrepreneurship ranges in scale from solo
Entrepreneur is often synonymous with
projects to major undertakings creating many
founder.
job opportunities.
The process in which an entrepreneur starts
The person who starts and operates a
and operates his business enterprise is
business enterprise is an entrepreneur.
entrepreneurship.

The entrepreneur is a coordinator as he

Entrepreneurship is the
coordinates all the three elements of
coordination maintained by an entrepreneur.
production i.e. land, labor and capital.

The person who innovates something new The innovation of something new or the process
is an entrepreneur. of innovation is entrepreneurship.

He who leads an enterprise towards its The way in which an entrepreneur leads his
vision thorough leadership, motivation is an manpower, motivates them for the achievement
entrepreneur. of the firms goal is entrepreneurship.
FACTORS AFFECTING ENTREPRENEURSHIP GROWTH
There are large numbers of varied factors which contribute to the growth of entrepreneurship. These factors
can be broadly classified into five.
1. 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.
2. 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 behavior 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 behavior. 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 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.
 3. 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 behavior 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.
(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.
 4. 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 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) Labor Conditions: -
The quality rather than quantity of labour is another factor which influences the emergence and growth of
entrepreneurship. The availability ofcheep labour positively affects entrepreneurship. Labor 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 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.
5. Personality Factors : -
The supply of entrepreneurship in a society is largely influenced by the presence of individuals with the
imitativeness, 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, laborers, 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.

IMPACT OF ENTREPRENEURSHIP FOR SUSTAINABLE DEVELOPMENT

Fig: Sustainable Entrepreneurship

Entrepreneurs can facilitate social transformation in favor of products and services produced in a sustainable
way. Consequently, the sustainable orientation of entrepreneurship contributes to sustainable development
goals (SDGs) and avoids environmental degradation.
Sustainability entrepreneurship acts at the interface of politics, business and civil society to mobilize new
resources and aim at a structural change towards socially and environmentally sound economic activities.
Sustainable entrepreneurship is opportunity oriented and aims at generating new products, services,
production processes, techniques, and organizational modes which substantially reduce social and
environmental impacts and which increase the quality of life.
By starting new firms and businesses, entrepreneurs play a key role in shaping the economy and creating a
more dynamic and diverse business landscape. Entrepreneurship also promotes innovation and competition,
leading to new and improved products and services that contribute to economic growth and development.
Entrepreneurship is a key driver of economic growth and development. By creating new businesses and jobs,
entrepreneurship leads to an increase in gross national product and per capita income. This is particularly
important for developing countries, where poverty and unemployment are major issues.
Entrepreneurship's importance lies in the following: Drives economic growth and creates new job. Encourages
innovation by bringing new ideas, products, and services to the market. Contributes to social change by
developing products or services that reduce people's dependence on outdated technologies most important
drivers of sustainable entrepreneurship are behavioral factors and business factors.
Entrepreneurship contributes to building resilient infrastructure, promoting inclusive and sustainable
industrialization and fostering innovation. However, entrepreneurs need a favorable and enabling business
ecosystem to thrive and scale up their impact.

Fig: Sustainable Entrepreneurship & Innovation

Three configurations for achieving sustainable entrepreneurship are high-quality education (SDG4),
responsible consumption and production (SDG12), and GDP that play central roles, but the role of
environmental quality in sustainable entrepreneurship is not evident.
Entrepreneurs boost economic growth by introducing innovative technologies, products, and services.
Increased competition from entrepreneurs challenges existing firms to become more competitive.
Entrepreneurs provide new job opportunities in the short and long term.
Sustainable entrepreneurship examples
E-cover is a company that produces cleaning products that are made from natural, renewable resources. The
company's products are free from harsh chemicals and are biodegradable, making them better for the
environment than traditional cleaning products.
 UNIT-IV B: ENTREPRENEURSHIP DEVELOPMENT PROGRAMME-

Syllabus

Objectives of EDP, Types of EDP, Stages of EDP, Enterprise Launching Formalities-Procedure, Planning
your Enterprise, Elements of planning, Business plan in a nutshell, Sources of help for Entrepreneurs.

_____________________________________________________________________________

What is EDP?
Entrepreneurial Development Programme (EDP) refers to a programme which is formulated to assist
the individuals in reinforcing their entrepreneurial motives, and attaining competencies and skills which
is essential for performing an entrepreneurial role successfully.

Meaning and Definition of Entrepreneurial Development Programme (EDP) :

According to N. P. Singh :
"Entrepreneurship Development Programme is designed to help an individual in strengthening his
entrepreneurial motive and in acquiring skills and capabilities necessary for playing his entrepreneurial
role effectively. is necessary to promote this understanding of motives and their impact on
entrepreneurial values and behavior for this purpose”.
EDP can also be defined as a pre-defined process that recognizes, inculcates, designs and refines the
skills and proficiencies of an individual to establish his own enterprise. In recent times, EDP has
become a professional task which extensively encourages the development of funded and private
businesses. The programme is meant to grow entrepreneurial aptitudes among people.

OBJECTIVES OF EDP
Following are the main objectives of EDPs :
1. To make people learn compliance with law.
2. To develop and fortify entrepreneurial quality, i.e., motivation or need for achievement.
3. To develop small and medium scale enterprises in order to generate employment and widen
the scope of industrial ownership.
4. To industrialize rural and backward sections of the society.
5. To understand the merits and demerits of becoming an entrepreneur.
6. To investigate the environmental set-up relating to small industries and small businesses.
7. To design project for manufacturing a product.
8. To increase the supply of entrepreneurs for quick industrial development.
9. To prepare individuals to accept the uncertainty involved in running a business.
10. To develop managerial skills among small entrepreneurs for improving the performance of
small-scale industries.
11. To offer profitable employment opportunities to educated young men and women.
12. To expand the sources of entrepreneurship.
STAGES OF EDP / Phases of Entrepreneurial Development Programme (EDP) :
All the EDPs mainly consist of three phases, which are illustrated as below:
i. Pre-Training Phase
ii. Training Phase
iii. Post-Training Phase

i. Pre-Training Phase :
 This step can be considered as the introductory phase in which the entrepreneurship
development programmes are launched. A wide spectrum of activities are performed in this
phase arc described below :
 Identification of suitable location where the operations can be initiated like a district.
 Selection of an individual as a course coordinator or project leader to coordinate the EDP
activities.
 Organisation of basic infrastructural facilities related to the programme.
 Conducting the environmental scanning or industrial survey in order to look for better business
opportunities.
 Developing various plans associated with the programme, like :
a) Promotional activities by using electronic or print media, posters, leaflets, etc.
b) Contacting business experts, different agencies, NGOs that can become a part of the
programme, directly or indirectly.
c) Printing the application forms and availing them in different locations with the instructions.
d) Establishing selection committee for screening of candidates.
e) Preparing budget and getting it approved from the management and arranging other
activities which are related to the programme.
f) Arranging and deciding the need-based elements in the syllabus of training programme and
to contact guest faculties for the training session.

 Looking for the assistance of various agencies such as DICs, banks, SISI, NSIC, DM and so on
 Conducting industrial motivational campaigns to increase the number of applications.

ii. Training Phase:

The main function of any EDP is to impart training to future entrepreneurs and guiding them for
establishing the enterprise. The normal duration of the entrepreneurship development programme is 4-
6 weeks and it is usually a full time course. The objectives, training inputs and the centre of focus are
explained in the programme design.
Commonly, it is considered that the trainees do not have enough information about the change
because of which new programme is prepared. Each trainee should appraise himself at the termination
of the training programme to have a clear view about his/her future endeavors.
 Training Phase - Programme Design
Objectives Focus Inputs
Promoting and sustaining
Entrepreneur. Behavioral inputs.
the skills of
entrepreneurship and
building up the confidence.
Business opportunity
guidance, information and
Enterprise establishment project planning inputs,
Helping in establishing the Creating enterprise. technical inputs. Guiding for
new enterprise through
enabling business
decision-making.
opportunities. Information
and project planning and
technical opinions.
Successful and profitable Enterprise
operation of enterprise. management, first-hand
Industrial exposure knowledge of factory Management inputs, plant
Performing profitable and layout, business sites, etc. visit/in-plant training
successful Information related to Management suggestions
operations, exposure factory layout, plant industrial visit or training.
various industrial location, organisation
knowledge. management and so on.

iii. Post-Training Phase :

This phase is also referred as the phase of follow-up assistance. In this phase, the candidates who
have completed their programme successfully are provided post-training assistance. This phase is very
important as after the completion of training programme, most of the entrepreneurs face a lot of
hardship in the business plan implementation. Thus, with the help of various counseling sessions, the
training organizations try to extend their support to trainees.
Members like State Financial Corporation, commercial banks, training institutions and District
Industries Centre constituted all together to assist the entrepreneurs on the basis of mentioned goals:

 To assist trainees in a meaningful manner so that trainees can realize their business plan.
 To analyze the development made by trainees in the project implementation.
 To evaluate the post-training approach.
 To provide escort services to the trainees with the help of various promotional and financial
institutions.
Commonly, these follow-up action meetings are conducted after every three years of training
completion and the tools used for the follow-up are :
 Postal questionnaires.
 Telephonic follow-up.
 Individual contact by the trainer.
 Team meetings.
A number of government and private institutions are providing assistance in India to entrepreneurs.
Some of them are listed below :

 Small Industries Development Organization (SIDO),

 Commercial Banks,
 National Alliance of Young Entrepreneurs (NAYE),
  National Institute for Entrepreneurship and small Business Development (NIESBUD),
 Entrepreneurship Development Institute of India (EDI),
 India Investment Centre (LIC),
 Small-scale industrial Development Bank Of India (SIDBI), and
 Technical Consultancy Organization (TCO).

IMPORTANCE OF ENTREPRENEURIAL DEVELOPMENT PROGRAMME (EDP) :

The importance of EDP is as follows:
1) Formation of Employment Opportunities:
Entrepreneurial development programmes generate employment opportunities in the developing and under-
developed countries. It assists and encourages individuals to establish their own business and enable them
to become self-employed. By setting-up. several business enterprises, EDP also creates abundant job
opportunities for other people.
2) Provides Adequate Capital:
A large amount of capital is required to set-up a business enterprise. This financial assistance is provided by
various EDP agencies. EDPs instruct the development banks such as ICICI, IDBI, IFCI, SIDCs, etc., to take
initiative in promoting entrepreneurship.
3) Proper Utilization of Local Resources:
New entrepreneurs utilize the available local resources in the most effective way. This utilization of
resources plays an important role in the development of a particular area or region at minimum cost. EDPs
.guide, educate and teach the entrepreneurs to exploit the local resources efficiently.
4) Increased Per Capital Income:
Entrepreneurs have the ability to organise the factors of production and utilize them in the most productive
manner by establishing an enterprise. This development leads to increased production, employment and
wealth generation. As a result, overall productivity and per capital income of the economy is raised.
5) Improved Standard of Living:
EDPs provide latest technologies and innovative methods to entrepreneurs which helps them to produce
large quantity of products at lower cost. This also enables entrepreneurs to exploit the available resources
and produce quality products. This automatically leads to improved standard of living.
6) Economic Independence:
EDPs strengthen the entrepreneurs to produce variety of products in large quantities at competitive prices. It
also helps an entrepreneur to develop substitutes of imported products which prevents the country from
being dependent on other foreign countries. It also saves foreign exchange of the country.
7) Preventing Industrial Slums:
Most of the developed industrial areas are facing problems related to industrial slums. This leads to
over burdening of public amenities and also affects the health of people adversely. EDPs offers several
subsidies, incentives, infrastructural support and financial grants to new entrepreneurs for establishing
their businesses, thus, preventing the growth of industrial slums.
8) Reducing Social Tension:
A majority of youngsters and educated individuals of the society are in the state of social unrest and
tension. This social tension restricts them from finding the right direction in their careers. Most of the
students feel frustrated about not getting a job after the completion of education. In such situations,
EDPs helps people by providing them proper guidance, assistance, training and support for
establishing new enterprises and businesses, As a consequence, social tension is reduced as they
generate self-employment opportunities.
9) Facilitating Overall Development:
EDPs facilitate entrepreneurship which helps in the overall development of the society by producing
new products, innovative services, low cost consumer goods, job opportunities, increasing the standard
of living, and overall productivity. This facilitates in the overall development of the economy and the
country.

TYPES OF EDP
Depending upon the objective of EDP, the nature of the target group, EDP can be classified into the
following types.
I. Entrepreneurship Awareness Training Programme
The objective of such an EDP is to just create awareness this can be achieved by delivering a lecture.
II. Product-Oriented EDP
This EDP is restricted to specific products like textiles, pack food products, casting, etc.

III.Target Oriented
 General for both men & women.
 Women entrepreneurs.
 Undergraduates.
 Graduates.
 Postgraduates.
 Engineers.
 Lower income group people.
 Craftsmen & artists.
IV. EDPs For Existing entrepreneurs.
These types of EDPs are generated by targeting existing entrepreneurs. These EDP assist for quality
certification, capacity expansion export & modernization of plants.
ENTERPRISE LAUNCHING FORMALITIES

What is Enterprise Launching Formalities?

A potential entrepreneur has to follow a step-by-step approach to start a new venture. The first
milestone on which the initiation of an enterprise depends is deciding and encouraging the self.
Similarly, if the correct venture is selected by the entrepreneur, his half of the job is completed.
In order to abide by various land-related laws, different types of situations have to be faced by the
entrepreneur for establishing and managing a new venture or small, scale enterprise. All the
governmental formalities, plans and legal policies must be followed carefully from the very conception
stage of the enterprise growth so that no legal difficulties occur in future.

How to Start a Startup?

1. Make a business plan.
2. Secure funding.
3. Surround yourself with the right people.
4. Follow the right legal procedures.
5. Establish a location.
6. Develop a marketing plan.
7. Build your customer base.
8. Plan to change.

Stages in Enterprise Launching Formalities

The different stages from which a business enterprise has to undergo during its development phase.
10 formalities for setting up a business enterprise are stated below:
1) Product Selection:

Deciding the type of business, selecting the product or product range for manufacturing along with its
quantity is the most vital step. The most critical facet of any successful project is a strong entrepreneur.
For the entrepreneur to develop a small-scale industry, a suitable project needs to be decided, which
mainly involves the selection of product or service and a perfect location for the business unit. Thus,
the first decision which an entrepreneur has to make is project selection. The following things will be
included in the project selection and preliminary activities:

 Selecting the product/service,

 Selecting the location,

 Conducting Project feasibility study,

 Preparing the business plan,

 Preparing a project profile.

2) Decide the Constitution:

The constitution of the business unit has to be decided by its promoters before starting any industry,
which are mainly of following types:

 Sole proprietorship.
 Partnership,
 Corporation/Limited Company,
 Cooperative,
 Franchising.
All these alternatives will be decided on the basis of the objective, size and type of the business.
Depending upon the available resources or the type of investment, the form of ownership is also
decided.
3) Registration :
Registration of a new venture is very important. Though not mandatory, but registration is very
advantageous for a business unit as it provides a legal identification and status to the business so that
it can execute all its legal rights. A registered business unit is, provided with government assistance,
incentives and licenses to import raw materials. Briefly, a business can ensure all its legal rights by
registering itself.
Registration schemes are used by the States for the implementation of their own policy
implementation. In some states, "SIDO registration scheme" or "State registration scheme" are
adopted.
Benefits of Registering:
There is no statutory basis of registration scheme. However, it is done by the units for receiving various
advantages, support or incentives from Central or State government. The various advantages are as
below :

 Credit prescription (priority sector lending). differential interest rates, etc.,

 Scheme of excise exemption,

  Exemption under direct tax laws,

 Statutory support such as reservation and Interest on Delayed Payments Act,

 Applying for a shed or plot in an industrial estate or a developed area,

 Applying for Corporation/Municipality for other licenses,

 Applying for power/water connection,

 Applying for financial assistance from banks and other institutions,

 Applying to the National Small Industries Corporation/State Small-Scale Industries basis,

 Obtaining sales tax, excise registration, etc., wherever required,

 Obtaining various approvals required to obtain license of importing capital goods and raw
materials.

Different set of facilities are provided by States and UTs for SSI, which mainly deal with developing the
industrial estates, tax subsidies, power tariff subsidies, capital investment subsidies and other financial
supports. Also, different benefits and incentives are provided by the Central and State government to
the registered firms.

4) Clearances from Specific Departments:

On the basis of nature of the industry and the location of units, various types of approvals are required
from different authorities.
Specific Clearances are usually required depending on the Type of Unit:

 Agricultural land conversion,

 Urban land ceiling clearance,

 Building plan approval,

 Factories Act,

 Trade licence,

 Pollution Control Board clearances,

 Sales tax registration,

 Central excise registration,

 Bureau of Indian Standards (BIS) certificate,

 Fruit product order (FPO) license,

 Food Adulteration Act license,

 Power loom registration,

 Electronics industries registration,

 Drugs and cosmetics license,

 Approvals of hotels,

 100 per cent export-oriented unit.

5) Location:

Deciding the location for constructing the business unit is the next step. The entrepreneur also has to
decide whether to buy or rent the business location. It’s also important to decide the size of plot,
covered and open areas, etc. This is quite important to have an appropriate industrial site or a ready
industrial shed for any industrial project. According to the business requirement, an industrial site can
be taken and a shed can be constructed, or an already constructed shed can be owned or leased.

The land for the project can be taken from the State Industrial Areas Development Board when the
decision about the business location is made. The entrepreneur can also buy private lands by fulfilling
all the legal formalities related with the conversion of land use to industrial purpose.

6) Machinery and Equipment:

Depending upon the selected product, different machines and equipment's required for production is
selected. Also, the different suppliers and their costs are evaluated and selected. The scheme of
National Small Industries Corporation (NSIC) can be used, in which different machines and
equipment's can be acquired on the basis of hire-purchase system. It is advisable to have a proper
plan for machines and equipment's in advance, particularly in cases when they are to be obtained from
other city, state or nation. So it is quite important to select and order most suitable machineries.
Second hand equipment's and machineries are quite popular among the entrepreneurs of SSI..
However, SSI entrepreneurs are often benefited from government agencies like National Small
Industries Corporation which provide machines and equipment's to small scale units at longer
repayment time and lower interest rates.

7) Project Report Preparation:

Once the nature of ownership, machines, equipment's and location are decided, the entrepreneur must
prepare the feasibility study or project report. A project report provides a detailed understanding about
the project and reveals its techno-economic feasibility. With the help of project reports, economic
viability and the technical feasibility of the selected product can be ensured. This report will help in
deciding the production, marketing, financial, and management plans. The project report also aids in
procuring finance, shed, power connection, water connection, raw material quotas, etc.
While preparing a project report, following points must be kept in mind:
 Probable applications of the project report.
 Providing details by not disclosing any confidential information.
 Validation of data and information provided in the report.
 Effective presentation of the data by using different charts, graphs, and pictorial formats.
 Timeliness and cost minimization.
 Correct estimation of number of printed copies required.
8) Project Appraisal:
In simple terms, evaluation of a project is called project appraisal. It is quite important to evaluate the project
from the viewpoint of economic, financial, technical, market, managerial and social aspects, while initiating
any enterprise so that the feasibility of the project can be checked.
The entrepreneur should make detailed appraisal reports including the techno-economic feasibility: study in
order to receive monetary support from financial institutions and banks. Thus, a fund-able project is the one
which has economic feasibility and technical viability.
Given below are the appraisals that can be performed at initial levels :
 Economical appraisal,
 Financial appraisal,
 Technical appraisal,
 Management appraisal,
 Organizational appraisal,
 Operational appraisal,
 Market appraisal.

9) Finance:
Finance can be considered as the backbone of an organization. Every entrepreneur needs finance to setup
a new venture. One can seek capital assistance and venture capital for starting an enterprise from various
financial agencies. Some specific steps and norms have to be followed by the entrepreneurs to receive
financial support from financial institutions and banks. However, these types of financial assistance's can
also be obtained on concessional rates from various other firms. Entrepreneurs who want to initiate their
own business units can also seek financial help under PMRY (Prime Minister's Rozgar Yojana) and REFP
(Rural Employment Generation Programme) schemes.
Means of Finance:
 Own equity,
 Internal accruals,
 Inter corporate deposits/investment,
 State financial institutions,
 Central financial institutions,
 Banks,
 Borrowings like ECB, CP, FDI, PCNRB,
 State subsidy and seed capital,
 Lease finance.

10) Implement the Project and Obtain Final Clearances:

After obtaining different clearances, licenses, infrastructure facilities, etc., from the concerned departments,
the entrepreneurs are required to implement the project. For this purpose, the activities required to be
performed by the entrepreneurs include ordering machineries, recruiting manpower, procuring raw
materials, marketing, erection and commissions, and obtaining final clearance. Once the unit is ready for the
production, different types of clearances are required to be taken. Similarly there are a number of
preliminary clearances which entrepreneurs have to take from various departments/organizations for
obtaining final approval.
ENTREPRENEURIAL DEVELOPMENT CYCLE

EDP starts with stimulation or searching of the potential entrepreneur where only awareness is created
those who are potential entrepreneurs get support in establishment units from various organizations
like D.I.C, S.S.I, S.I.D.C, I.C.I.C.I, S.I.D.B.I, N.I.E.F.S, etc. Thus they are very useful in setting &
sustaining small & micro-units.

Entrepreneurial Development Cycle

SIMULATION SUPPORT SUSTAINING

A. Stimulation consists of:

1. Entrepreneurial Education.
2. Planned Publicity for entrepreneurial opportunities.
3. Identification of potential entrepreneurs through a scientific method.
4. Motivational Training.
5. Help and guidance in selecting products and preparing project reports.
6. Making Availability of Techno-Economic Information and Product Profits.
7. Evolving new products and processes.
8. Availability of Local agencies with trained personnel.
9. Creating an Entrepreneurial forum.
10. Recognition of skills.

B Support consists of:

1. Registration of Unit.
2. Arranging Finance.
3. Providing land, shed, etc
4. Guidance.
5. Supply of scarce raw materials.
6. Getting or importing licenses.
7. Providing common facilities.
8. Granting tax relief.
9. Offering management.
C. Sustaining consists of:
1. Help modernization
2. Help Diversification /Expansion/Substitute production.
3. Additional Financing for full capacity utilization.
4. Differing repayment interest.
5. Diagnostic industrial extension.
6. Production unit’s legislation.
7. Product reservations.
8. Quality testing and Improving Services.
9. Need-based common facilities center.

SUPPORT TO ENTREPRENEURS: EDP INSTITUTIONS IN INDIA & INSTITUTIONAL SUPPORT

Governments-both Central and State, have taken a number of measures for the development of small
and medium enterprises. Government has set up a number of development institutions to support
entrepreneurs. Some of the institutions assisting entrepreneurs include District Industries Centers
(DICs) and Industrial Estate, Small Industries Development Organization (SIDO), Small Industries
Service Institutes (SISI), Small Industry Development Corporation (SIDCO), Entrepreneurial Guidance
Bureau (EGB), National Alliance of Young Entrepreneurs (NAYE), National Productivity Council (NPC)
and Venture capital funds (VCF). In addition, all India financial institutions-IDBI, IFCI, ICICI-have
promoted/sponsored a number of Technical Consultancy Organizations (TCOs) to assist small
entrepreneurs in different ways. Recently, the Small Industries Development Bank of India (SIDBI) has
been established to help small scale units. Besides, agencies like Khadi and Village Industries
Commission, Commercial Banks, Cooperative Banks, EXIM Bank and National Science and
Technology Entrepreneurship Board undertake promotional activities aiming at support in
entrepreneurship development.
The various kinds of support provided by aforesaid institutions to the entrepreneurs to help them
establish industries are.
 Small Scale Industries Board (SSIB)
 State Small Industries Corporations
 Small Industries Development Corporation (SIDCO)
 District Industries Centres (DICs)
 Small Industries Development Organization (SIDO)
 Entrepreneurial Guidance Bureau (EGB)
 Khadi And Village Industries Commission (KVlC)
 National Institute of Entrepreneurship and Small Business Development (NISEBUD), New Delhi
 National Institute of Small Industries Extension Training (NISIET), Hyderabad
 And other Institutes Supporting Entrepreneurs
  Small Scale Industries Board (SSIB)
The Government of India constituted a Board, namely, Small Scale Industries Board (SSIB) in 1954 to
advise on the development of small scale industries in the country. The SSIB is also known as Central
Small Industries Board. The range of developmental work in small scale industries involves several
departments/ministries and several organs of the Central/State Governments. Hence, to facilitate co-
ordination and inter-institutional1inkages, the Small Scale Industries Board has been constituted. The
Industries Minister of the Government of India is the Chairman of the SSIB. The SSIB comprises of 50
members including State Industry Minister, some Members of Parliament, Secretaries of various
Departments of Government of India, financial institutions, public sector undertakings, industry
associations and eminent experts in the field.
 State Small Industries Corporations
Many State Governments have set up Small Industries Corporations in order to undertake a number of
commercial activities. The most important of these activities are distribution of scarce raw materials,
supply of machinery on hire purchase basis, constitution and management of industrial estates,
procurement of orders from Government Departments, assistance in export marketing and in certain
cases provision of financial, technical and managerial assistance to small enterprises.
 Small Industries Development Corporation (SIDCO)
SIDCO is the state small industries corporation and plays a lead role in developing small scale sector.
The main functions of SISIs include:
• To serve as interface between Central and State Governments.
• To render technical support services.
• To conduct Entrepreneurship Development Programmes.
• To initiate promotional programmes.
 District Industries Centres (DICs)
The District Industries Centres (DICs) were established in May 1978 with a view to provide integrated
administrative framework at the district level for promotion of small-scare industries in rural areas. They
are the implementing arm, of the Central and State Governments for various schemes and
programmes. Registration of small industries is done at the district industries centres. The
organizational structure of DICs consists of General Manager, four Functional Managers and three
Project Managers to provide technical service in the area relevant to the needs of district concerned.
Management of the DIC’s is done by the State Governments. The scheme has now been transferred to
the states and from the year 1993-94, funds will not be provided by the Central Government to the
States for running the DICs.
 Small Industries Development Organization (SIDO)
Small Industries Development Organization (SIDO) is a subordinate office of the Department of SSI & 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. Development Commissioner is the
head of the SIDO. He is assisted by various directors and advisers in evolving and implementing various
programmes of training and management consultancy, industrial investigation, possibilities for development
of different types of Small scale industries, development of industrial estates, etc.
  Entrepreneurial Guidance Bureau (EGB)
The EGB has, been set up to guide entrepreneurs in identifying investment opportunities, assisting
them in selecting locations or the projects, preparing project profiles, assisting them to get financial
assistance.
EGB also renders assistance from banks/financial institutions or for submitting proposals for the letter
of intent, etc. EGB also establishes direct contact with engineering graduates, technically qualified
personnel and small entrepreneurs to promote entrepreneurship development.
 Khadi And Village Industries Commission (KVlC)
KVIC was set up in 1953. The primary objective of establishing KVIC is to develop Khadi and Village
industries and improving rural employment opportunities. Its wide range of activities include training of
artisans, extension of assistance for procurement of raw materials, marketing of finished products and
arrangement for manufacturing and/ distribution of improved tools, equipment and machinery to producers
on concessional terms.
 National Institute of Entrepreneurship and Small Business Development (NISEBUD), New
Delhi
It is an apex national level institute of its kind set up at New Delhi in 1983. Its main functions are to
coordinate research and training in entrepreneurship development and to impart specialized training to
various categories of entrepreneurs. Besides, it also serves as a forum for interaction and exchange of
views between various agencies engaged in activities relating to entrepreneurial development.
 National Institute of Small Industries Extension Training (NISIET), Hyderabad
This institute was set up in 1956 to develop the required manpower for running small-scale industries in
the country. Accordingly, its main functions are: (a) To impart training to the persons engaged in small-
scale industries. (b) To undertake research studies relating to development of small-scale industries.
(c) To enter into agreements relating to consultancy services both with national and international
organizations to provide consultancy services to small industries in the country.

Other Institutes Supporting Entrepreneurs

Following are some of the important institutes set up by the Government for development of small-
scale industries:
(a) Electronic Training and Service Institute, Nainital.
(b) Central Machine Tools Limited, Bangalore.
(c) Sports Goods and Leisure Time Equipment, Meerut.
(d) Central Institute of Plastics Engineering and Tools, Madras.
(e) National Institute of Foundry and Forging Technology, Ranchi.
(f) Technical Consultancy Organizations (TCOs)
(g) Commercial banks and Entrepreneurial Development
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