Introduction to

Entrepreneurshi
p
 What Is Entrepreneurship?
The term ‘entrepreneurship’ refers
to the functions performed by an
entrepreneur.
It is the process involving numerous
actions to be carry out by the
entrepreneur in establishing a new
enterprise.
 What Is Entrepreneurship?

The management is regarded as what

managers do;
What Is Entrepreneurship?
Entrepreneurship is regarded as what
entrepreneurs do.

Socorro Cancio-Ramos is the matriarch (a

woman who is the head of a family or
tribe) of National Book Store, 1940, the
Philippines’ leading retailer of books,
office supplies, and greeting cards -- a
rare example of a businesswoman who
watched her efforts fail multiple times,
then rose from the ashes to succeed with
one more try at the same venture.
Entrepreneurship can be viewed as a function
of:
 (I)Identifying and using the opportunities exist in
the market;
 (II) Converting the ideas into action;
 (III)
Undertaking promotional activities to launch
an enterprise;
 (IV) Striving for excellence in his/her field of work;
 (V) Bearing the risk and uncertainties involved,
and
 (VI) Harmonizing, avoids a one-size-fits-all
What it means to be an entrepreneur
Entrepreneur is a person who tries to do
something new, visualizes or envisions
a business opportunity, organizes the
necessary resources for setting up the
business and bears the risk involved.
Thus, an entrepreneur may be termed
as an innovator, an organizer and a risk
 As an innovator, the entrepreneur introduces new
products in the market; finds out new markets for
existing products; introduces new production
technology; launches new marketing strategy and so
on.
 He bears the risk and uncertainties or doubts
connected with the business activities.
 Anentrepreneur refers to a person who dream of a
business opportunity, takes steps to promote a new
enterprise, assembles resources in the form of men,
materials and money to make the business venture
successful and bears the risk and uncertainties
QUALITIES OF SUCCESSFUL ENTREPRENEUR

What makes an entrepreneur

successful?
 Did they all have certain
common qualities?
They all had certain prominent qualities which
can be summarized as follows.

(a) Initiative: An entrepreneur must have an

innovative ability or capacity, pick the right
opportunity, and initiate action. If he/she does not
initiate action at the right time the opportunity may
be lost. Hence, the ability of an entrepreneur to take
initiative is the key to the success of the venture to a
great extent.
(b) Wide Knowledge: An entrepreneur should have wide
knowledge of the economic and non-economic environment of
business like the market, consumer attitudes, technology, etc.
In the absence of such adequate knowledge, the decisions
taken by him may be poor and will not contribute to the
profitability of his business in the long run.

(c) Willingness to assume risk: Entering any venture is full of

risks and uncertainties. In order to deal with various kinds of
risks and uncertainties efficiently, the entrepreneur should have
willingness and necessary have the ability to see what is likely
to happen in the future to assume risks. The quantity and
quality of risk taking would determine the quality of business
decisions.
(d) Open mind and optimistic outlook: An entrepreneur
should have an open mind. He/she must possess a dynamic
or self motivated and positive outlook so as to predict
changes in the business environment and respond
effectively without delay.

(e) Adaptability: The entrepreneur must understand the

ground realities of the business environment. He/she should
be prepared to adapt to the changes taking place in the
system. Any resistance or struggle to change and delay in
responding thereto, shall lead to losing the opportunity of
taking advantage thereof.
(f) Self-confidence: For achieving success in life, one should
have confidence in himself/ herself. A person who lacks
confidence can neither do any work himself/herself nor inspire
others to work. Self-confidence is reflected in courage,
enthusiasm and the ability to lead.
(g) Leadership Qualities: An entrepreneur should possess the
qualities of a good leader. He/she should have the traits of
self-discipline, presence of mind, sense of justice, honor and
self-worth and above all, a high moral character.
(h) Orientation towards hard work: There is no substitute for
hard work in life. While running a business, one problem or the
other may occur. The businessmen has to be observant about
these and find solutions thereof as early as possible. This
requires hard work on the part of the entrepreneur. He has to
 FUNCTIONS OF AN ENTREPRENEUR
The functions of an entrepreneur can be summarized as
follows.
(a) Conception of an idea: An entrepreneur is the person
with a creative mind who can identify business
opportunities and take steps for the conversion of
ideas into successful business ventures, and give
them a concrete shape.
(b) Even if entrepreneurs have a great business idea
they still have to find a cost-effective way to market
and sell their products and services.
(b) Promotion: It is felt that generally an entrepreneur
undertakes or assumes the risk of setting up a small
enterprise as a sole proprietor. But, now-a-days many
entrepreneurs have assumed the role of promoters of
large companies.
In fact, promotion may be undertaken for setting up a
new business, small or large expansion of an existing
business or for combining two or more business firms.
As a promoter, the entrepreneur has to conduct
feasibility studies, decide to the form of organization,
assemble the required funds and people, and give a
concrete shape to the business proposition.
 DISTINCTION BETWEEN ENTREPRENEUR AND PROMOTER
An entrepreneur is also known as the promoter as,
 He also assembles or gathers the necessary funds and people,
 Undertakes the risk and gives a shape to the business proposal.
However, in theory, there exists a fine distinction between the two.
 Those who visualize a business opportunity and are ready to bear the
risk are termed as ‘entrepreneurs’ while
 Those who take steps to set up the business and make it operational
are known as promoter.
But in actual practice, such distinction does not hold good because the
role of entrepreneur, now-a-days, does not confine only to identifying a
business opportunity and his readiness to bear the risk. It also extends to
taking necessary steps to set up the business and make it operational
specially because facilities like venture capital and services of
A business feasibility study is often ignored but acts as
a vital prerequisite to building a successful business
from the scratch.
It is an analysis of how viable or successful an idea can
be considering its technical, economical, legal,
operational and scheduling factors. It helps the
entrepreneur to identify potential problems and answer
questions like:

 Should I go ahead with this idea?

 Will this idea work?
 Does it make sense from an economic and
Centre for Entrepreneurship at University of Rochester explained that “a
feasibility study can be defined as a controlled process for identifying
problems and opportunities, determining objectives, describing situations,
defining successful outcomes, and assessing the range of costs and
benefits associated with several alternatives for solving a problem.”
The information gathered and presented in a feasibility study will help
entrepreneurs to:
 List in detail all the things they need to make the business work;
 Identify logistical and other business-related problems and solutions;
 Develop marketing strategies to convince a bank or investor that their
business is worth considering as an investment; and
 Serve as a solid foundation for developing their business plans.
Feasibility study considers five separate areas in assessing a
business, and they include:
Technical Feasibility: This assessment is to determine whether
the business has the technical expertise and resources to
handle the project. It also involves the evaluation of hardware,
software and other technological requirements to handle the
proposed project.
A technical feasibility study assesses the details of how you
intend to deliver a product or service to customers.

A technical feasibility study is an excellent tool for both

troubleshooting and long-term planning. It can serve as a
flowchart of how your products and services evolve and move
through your business to physically reach your market.
Feasibility study considers five separate areas in assessing a
business, and they include:

Economic Feasibility: This assessment is to determine the

sustainability, cost and benefits associated with a project
before the financial resources are allocated. It helps the
entrepreneur to determine the proposed project’s positive
economic benefit.
Feasibility study considers five separate areas in
assessing a business, and they include:
Legal Feasibility: This assessment helps to determine
whether the proposed project conflicts with the legal
requirements of its country of operation. This is to
determine the new system conflicts legal requirements
e.g. a data processing system must comply with the
local Data Protection Acts.
Feasibility study considers five separate areas in assessing a business,
and they include:
Operational Feasibility: This assessment measures how well a proposed
project solves the problems, and takes advantage of the opportunities
identified during scope definition. It focuses on the degree to which the
proposed project fits in with the existing business environment. It
analyses how a project plan satisfies the requirements identified in the
analysis phase of the project development.
It determines if the human resources are available to operate a system
once it has been installed.
Scheduling Feasibility: This is the most important assessment for the
success of a project; after all, a project will fail if not completed on
time. It is a measure of how reasonable the project timetable is.
Typically this means estimating how long a project takes to develop.
Some projects usually require the setting up of a gantt chart for easier
monitoring.
Relevance of the study to an entrepreneur includes:

 It serves as a filter, screening out ideas that lack potential for

building a successful business before an entrepreneur commits the
required resources for capital.
 It also assists the entrepreneur with information gathering to assess
the business concept, including legal and compliance requirements,
costs and marketing.
 It helps to narrow the business alternative.
 It opens an entrepreneur’s eyes to new opportunities or ideas that
could change the scope of the project.
In all, be objective and realistic throughout the process. And
remember, there is really no such thing as an unsuccessful business
feasibility study. The failure would have been if you had invested your
own and other people’s money and then lost it due to barriers you
(c) Innovation: An entrepreneur is also seen as an
innovator who tries to develop new technology,
products and markets. The entrepreneur uses his
creative abilities to do new things and make use of
opportunities in the market.
(d) Bearer of risks and uncertainty: You know that
starting of a new business venture involves good
amount of risk and uncertainty.
To start with, it is the entrepreneur who assumes risks
and is prepared for the losses that may arise because
of unforeseen situations in future. In fact, it is his
willingness to take risks that helps him to take
initiatives in doing new things or trying new methods
(e) Arranging necessary capital: Arranging funds is
one of the biggest hindrance in setting up a new
entrepreneur. It is he who has to provide the initial
capital (otherwise known as ‘risk capital’ or ‘seed
capital’) for starting the ventures and then make the
necessary arrangements for raising additional funds
required to carry on and expand the business.
(f) Staffing: An entrepreneur has to design the
organizational structure and hire suitable persons for
various positions. He also makes an estimate for
skilled and unskilled workers required and make
arrangements for their recruitment.
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
A business enterprise comes into existence due to the
pioneering efforts of entrepreneurs. However, there are several
issues and problems faced by entrepreneurs while giving shape
to their idea. These are as follows:
(a) Selection of business
(b) Choice of form of business enterprise
(c) Financing
(d) Location
(e) Size of the unit
(f) Machines and equipment's
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(a) Selection of business: The entrepreneur might be
having a very good business idea. However,
successful implementation of the idea into business
activity involves a thorough exercise.
 First of all, he/she has to study the market to know
whether the idea of products or services could be
accepted by the market. For the purpose, the
entrepreneur has to determine the market demands of
the intended products/services and carry out exercises
to find out the projected costs of the product or
services.
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(b) Choice of form of business enterprise: There are various
options available to the entrepreneur as far as the choice of
form is concerned. He/She may go in for
 sole proprietorship, is the most common form of business
organization. It's easy to form and offers complete managerial
control to the owner. However, the owner is also personally
liable for all financial obligations of the business.
a partnership or a joint stock company. The choice is rather
difficult issue. However, there are certain lines of business
where one has no choice.
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(b) Choice of form of business enterprise: For example, take the
case of banking and insurance. These can only be taken up by
the joint stock companies.
The size of the business will determine the form of organization.
Apparently, company form of organization is suitable in case of
large-scale operations, while sole proprietorship or partnership
is considered more suitable for small scale and medium scale
operations.
ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
Joint Stock Company
The simplest way to describe
a joint stock company is that
it is a business organization
that is owned jointly by all its
shareholders. All
the shareholders own a
certain amount of stock in
the company, which is
represented by their shares.
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(c) Financing: The problem of arranging finance always troubles
the entrepreneur. As you know, without capital no business
activity can be started. Capital is needed for the entrepreneur to
buy fixed assets like land and building, machinery and equipment
etc. Further, finance is needed to meet day-to-day expenses of
the business.
 Thepurpose is to allocate the productive resources in order to
minimize losses and reduce costs in production.
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(d) Location: The problem of locating the business unit is
another issue for consideration that should be carefully
handled by entrepreneur. Location of a business unit
depends upon many factors like availability of raw
material, availability of transport, power, water, nearness
to market etc. The government also provides many
incentives in the form of tax holidays, rebate in power
and water bills etc. to the unit located in a backward area
or underdeveloped area. Thus, the entrepreneurs need to
look at all these factors before setting up a business unit.
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(e) Size of the unit: Size of the business is influenced by
several factors like technical, financial and market
considerations. When entrepreneurs feel that they can
market the intended products or services and can raise
sufficient amount of capital, they can start their
operations in a big way.
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(e) Size of the unit: Generally, the entrepreneurs may
start their operations on small scale and expand
gradually. For example, the owner of Nirma Limited, Dr.
Karsanbhai Patel used to sell washing powders taking
rounds in bicycles in 1980s and with increase in operation
it has now become Nirma Limited.
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(e) Size of the unit: There is no doubt that if an
entrepreneur starts on a small scale, it is easier for
him/her to adapt to changes without much risk as huge
investments will not be blocked in permanent assets.
However, in the changing business scenario, many
entrepreneurs start their ventures on large scale and are
prepared to take big risks. Of late, many new
entrepreneurs, particularly technocrats (who are
professionally trained and employed) have joined in the
economic development after leaving their lucrative jobs
and started their new ventures in a big way
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(f) Machines and equipment's: The choice of machines,
equipment's and processes is a delicate problem before
starting a new venture. This depends on various factors
like availability of funds, size of production, and the
nature of production process. The emphasis should be
placed on productivity. Availability of facilities of repairs
and maintenance, availability of spare parts and after
sale service are also an important consideration while
selecting a particular equipment and machinery.
 ISSUES AND PROBLEMS FACED
BY ENTREPRENEURS
(g) Suitable manpower: If the size of business is large, the
entrepreneur has to find suitable competent persons for
various functional areas. He/She has to identify the right
persons for each area and motivate them to join the set
up. It is not that easy. It involves a lot of patience and
persuasion. Thus, the entrepreneur has to find solution to
many problems and issues while launching a new
business. The success is ensured by making proper
choices and arrangements.