Entrepreneurship & Project Management

Unit 1

Entrepreneur and Entrepreneurship

1.1. Entrepreneur

An entrepreneur is an individual who creates a new business, bearing most of the risks
and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator,
a source of new ideas, goods, services, and business/or procedures.

Entrepreneurs play a key role in any economy, using the skills and initiative necessary to
anticipate needs and bring good new ideas to market. Entrepreneurs who prove to be
successful in taking on the risks of a startup are rewarded with profits, fame, and
continued growth opportunities. Those who fail, suffer losses and become less prevalent
in the markets.

Functions of an Entrepreneur

The following points highlight the top five functions of an entrepreneur. The functions
are: 1. Decision Making 2. Management Control 3. Division of Income 4. Risk-Taking and
Uncertainty-Bearing 5. Innovation.

1. Decision Making:

The primary task of an entrepreneur is to decide the policy of production. An

entrepreneur is to determine what to produce, how much to produce, how to produce,
where to produce, how to sell and’ so forth. Moreover, he is to decide the scale of
production and the proportion in which he combines the different factors he employs. In
brief, he is to make vital business decisions relating to the purchase of productive factors
and to the sale of the finished goods or services.

2. Management Control:

Earlier writers used to consider the management control one of the chief functions of the
entrepreneur. Management and control of the business are conducted by the
entrepreneur himself. So, the latter must possess a high degree of management ability to
select the right type of persons to work with him. But, the importance of this function has
declined, as business nowadays is managed more and more by paid managers.

3. Division of Income:

The next major function of the entrepreneur is to make necessary arrangement for the
division of total income among the different factors of production employed by him. Even

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if there is a loss in the business, he is to pay rent, interest, wages and other contractual
incomes out of the realised sale proceeds.

4. Risk-Taking and Uncertainty-Bearing:

Risk-taking is perhaps the most important function of an entrepreneur. Modern

production is very risky as an entrepreneur is required to produce goods or services in
anticipation of their future demand.

Broadly, there are two kinds of risk which he has to face. Firstly, there are some risks,
such as risks of fire, loss of goods in transit, theft, etc., which can be insured against. These
are known as measurable and insurable risks. Secondly, some risks, however, cannot be
insured against because their probability cannot be calculated accurately. These
constitute what is called uncertainty (e.g., competitive risk, technical risk, etc.). The
entrepreneur undertakes both these risks in production.

5. Innovation:

Another distinguishing function of the entrepreneur, as emphasised by Schumpeter, is to

make frequent inventions — invention of new products, new techniques and discovering
new markets — to improve his competitive position, and to increase earnings

Types of Entrepreneur

1. Trading Entrepreneur:

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

2. Manufacturing Entrepreneur:

The manufacturing entrepreneurs manufacture products. They identify the needs of the
customers and, then, explore the resources and technology to be used to manufacture the
products to satisfy the customers’ needs. In other words, the manufacturing
entrepreneurs convert raw materials into finished products.

3. Agricultural Entrepreneur:

The entrepreneurs who undertake agricultural pursuits are called agricultural

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

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Based on the Use of Technology:

1. Technical Entrepreneur:

The entrepreneurs who establish and run science and technology-based industries are
called ‘technical entrepreneurs.’ Speaking alternatively, these are the entrepreneurs who
make use of science and technology in their enterprises. Expectedly, they use new and
innovative methods of production in their enterprises.

2. Non-Technical Entrepreneur:

Based on the use of technology, the entrepreneurs who are not technical entrepreneurs
are non-technical entrepreneurs. The forte of their enterprises is not science and
technology. They are concerned with the use of alternative and imitative methods of
marketing and distribution strategies to make their business survive and thrive in the
competitive market.

Based on Ownership:

1. Private Entrepreneur:

A private entrepreneur is one who as an individual sets up a business enterprise. He / she

it’s the sole owner of the enterprise and bears the entire risk involved in it.

2. State Entrepreneur:

When the trading or industrial venture is undertaken by the State or the Government, it
is called ‘state entrepreneur.’

3. Joint Entrepreneurs:

When a private entrepreneur and the Government jointly run a business enterprise, it is
called ‘joint entrepreneurs.’

Based on Gender:

1. Men Entrepreneurs:

When business enterprises are owned, managed, and controlled by men, these are called
‘men entrepreneurs.’

2. Women Entrepreneurs:

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Women entrepreneurs are defined as the enterprises owned and controlled by a woman
or women having a minimum financial interest of 51 per cent of the capital and giving at
least 51 per cent of employment generated in the enterprises to women.

Based on the Size of Enterprise:

1. Small-Scale Entrepreneur:

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

2. Medium-Scale Entrepreneur:

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

3. Large-Scale entrepreneur:

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

Based on Clarence Danhof Classification:

Clarence Danhof (1949), on the basis of his study of the American Agriculture, classified
entrepreneurs in the manner that at the initial stage of economic development,
entrepreneurs have less initiative and drive and as economic development proceeds, they
become more innovating and enthusiastic.

Based on this, he classified entrepreneurs into four types:

These are discussed in seriatim:

1. Innovating Entrepreneurs:

Innovating entrepreneurs are one who introduce new goods, inaugurate new method of
production, discover new market and reorganise the enterprise. It is important to note
that such entrepreneurs can work only when a certain level of development is already
achieved, and people look forward to change and improvement.

2. Imitative Entrepreneurs:

These are characterised by readiness to adopt successful innovations inaugurated by

innovating entrepreneurs. Imitative entrepreneurs do not innovate the changes
themselves, they only imitate techniques and technology innovated by others. Such types
of entrepreneurs are particularly suitable for the underdeveloped regions for bringing a

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mushroom drive of imitation of new combinations of factors of production already

available in developed regions.

3. Fabian Entrepreneurs:

Fabian entrepreneurs are characterised by very great caution and skepticism in

experimenting any change in their enterprises. They imitate only when it becomes
perfectly clear that failure to do so would result in a loss of the relative position in the
enterprise.

4. Drone Entrepreneurs:

These are characterised by a refusal to adopt opportunities to make changes in

production formulae even at the cost of severely reduced returns relative to other like
producers. Such entrepreneurs may even suffer from losses but they are not ready to
make changes in their existing production methods.

Following are some more types of entrepreneurs listed by some other behavioural
scientists:

1. Solo Operators:

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

2. Active Partners:

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

3. Inventors:

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

4. Challengers:

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

5. Buyers:

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

6. Life-Timers:

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

Essential characteristics to be successful as an entrepreneur:

1. Creative

Entrepreneurship starts with an idea. To be successful, you need to always be thinking of

new ideas and better ways of doing things.

In an interview in Martyn Lewis's book "Reflections on Success," Virgin Airlines founder

Richard Branson said, "I've gone into business, not to make money, but because I think I
can do it better than it's been done elsewhere. And, quite often, just out of personal
frustration about the way it's been done by other people."

Entrepreneurs are not satisfied with the status quo. They think outside the box and look
for opportunities to come up with new solutions.

2. Passionate

Perhaps the most important characteristic for entrepreneurs, passion is essential to any
business owner or working professional's success. Without passion, there is no reason
for your work and no drive to do it.

Entrepreneurs love what they do and are extremely dedicated to the businesses they
create. To be successful, you must be confident in yourself and your business, and you
must be proactive with what you do and how you do it.

3. Motivated

In an interview with The Computerworld Smithsonian Awards Program, the late Apple
founder Steve Jobs said, "I'm convinced that about half of what separates the successful
entrepreneurs from the non-successful ones is pure perseverance."

Because of their passion for their ideas, entrepreneurs are willing to put in the long hours
and hard work required to launch and run a successful new business. Are you self-

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motivated? Entrepreneurs are their own boss, which means there's no one telling them
to do things. You must be in charge of your own time and how you spend it.

4. Optimistic

Do you see the glass half empty or half full? For entrepreneurs, it's always half full.
Entrepreneurs always look on the bright side and are constant dreamers. They look at
how they can do things better and make the world a better place. They never dwell on the
past or the negative. Instead, they focus on moving forward and moving up.

When they're confronted with challenges, entrepreneurs don't see them as problems;
they see them as opportunities. Challenges fuel entrepreneurs and make them reach
higher and do more.

5. Future-oriented

Because entrepreneurs are focused on moving forward, they are always looking toward
the future. Entrepreneurs are very goal-oriented and know exactly what they want. They
set their goals and everything they do is aimed at achieving those goals.

Having a strong vision helps propel you toward accomplishment. Consider setting a goal
for yourself - a north star that can guide you on your path to success.

6. Persuasive

To be successful in business, you have to know business. If you're a people person and
know how to get people to listen to you, you could be a successful entrepreneur.

Especially when first starting out, entrepreneurs need to gain buy-in from those around
them on their big idea. If it's an out-of-the-box idea, which it usually is, many people will
be skeptical before giving their support or investing any money. That's why
entrepreneurs need to use their persuasiveness to sell themselves and their ideas.

7. Flexible

According to professional development coach Ruchira Agrawal in an article for Monster,

"As an entrepreneur, you'll typically start out as a 'solopreneur,' meaning you will be on
your own for a while. You may not have the luxury of hiring a support staff initially.
Therefore, you will end up wearing several different hats, including secretary,
bookkeeper and so on."

Entrepreneurs know how to adapt to unfamiliar situations. If their business requires that
they learn how to build a website or send an invoice, they'll do it. Whatever it takes,

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entrepreneurs are ready and willing. They always approach things with an open mind
and are willing to change course if they need to.

8. Resourceful

In business, problems aren't a matter of if, but when. Entrepreneurs do not shy away from
challenges or conflicts. Instead, they face them head on and come up with a solution. They
know how to solve problems effectively.

Entrepreneurs also know how to make the most of what they have. Time, money and
effort are never used haphazardly. Everything has a plan and a purpose.

9. Adventurous

In an interview with Y Combinator president Sam Altman, Facebook founder Mark

Zuckerberg said, "In a world that's changing so quickly, the biggest risk you can take is
not taking any risk."

Entrepreneurs know that to be successful, they must be willing to take risks. While they
don't mind walking on the wild side, they don't take risks lightly. They know how to plan
for the unknown and make a calculated decision that is best for them and their business.

10. Decisive

There is no room for procrastination in business. Entrepreneurs know what needs to be

done and don't hesitate to make the decisions that will lead them to success. They don't
let opportunities pass them by; instead, they seize the day and get the job done.

Role of Entrepreneurs

A lot of hard work goes into starting and eventually expanding an enterprise. This hard
work starts with the entrepreneur and trickles down the entire organization. But this is
a very broad definition and does not really appreciate and highlight the actual role of
entrepreneurs with respect to their enterprises.

So to explain it in a better way, let us break it down into points about how an entrepreneur
is vital to the enterprise.

1. Initiator

The entrepreneur is the one who initiates the process of creating an enterprise by coming
up with the idea for the business and planning out how to turn that idea into a reality.

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2. Risk Taker

In an enterprise, the entrepreneur, being the owner, is the biggest risk taker. He is the
one who finds the capital to back up his idea and also the person who is accountable in
the face of the failure of that particular idea.

3. Reduces Risk

It is also one of the most important roles of entrepreneurs to reduce the risk of an
enterprise failure by bringing in people that can help the organization grow. These people
can be shareholders or investors that have a stake in the company and therefore are
motivated to help the company succeed.

4. Allocator

An entrepreneur procures and allocates various resources in the organization. The most
important of these resources is manpower. The entrepreneur is responsible for hiring an
efficient staff to help him carry out his business. This is important because a good
manager can take a business to new heights, while a bad manager can destroy the
business.

He is also responsible for creating an organizational structure and departments for a

more efficient functioning of the enterprise.

5. Adhering to Legal Norms

To ensure that the enterprise adheres to legal norms and policies, such as obtaining a
license is also the duty of the entrepreneur. Not pertaining to these can mean serious legal
consequences for the enterprise. These could be in terms of financial losses for the
organization or something even more serious such as shutting down of an enterprise.

6. Forecasting

Last but far from least, the role of entrepreneurs involve acting as a forecaster. The
enterprise works in a business environment and is affected by changes occurring in
various aspects of this environment. It could be internal, such as strikes, machinery
breakdowns, budget cuts etc. or these could be external, such as legal policy changes,
political or social unrest, technological advancements, etc.

An entrepreneur must be able to correctly forecast these changes and prepare the
organization to deal with these changes.

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1.3. Entrepreneur vis-à-vis Professional Manager, Intrapreneur,

Copreneur

Intrapreneur
An intrapreneur is an employee who is tasked with developing an innovative idea or
project within a company. The intrapreneur may not face the outsized risks or reap the
outsized rewards of an entrepreneur. However, the intrapreneur has access to the
resources and capabilities of an established company.

What Is an Intrapreneur?

An intrapreneur is an employee who is tasked with developing an innovative idea or

project within a company. The intrapreneur may not face the outsized risks or reap the
outsized rewards of an entrepreneur. However, the intrapreneur has access to the
resources and capabilities of an established company.

Key Takeaways

• An intrapreneur works inside a company to develop an innovative idea or project

that will enhance the company's future.
• The intrapreneur is generally given autonomy to work on a project that may have
a considerable impact on the company.
• Over time, an intrapreneur may turn into an entrepreneur.

How Intrapreneurship Works

Intrapreneurs are employees of a company who are assigned to work on a special idea or
project. They are given the time and freedom to develop the project as an entrepreneur
would.

However, they are not working solo. Intrapreneurs have the resources and capabilities of
the firm at their disposal.

Intrapreneurs and entrepreneurs have different objectives. An entrepreneur envisions

creating a company from the ground up. An intrapreneur has a broader vision for an
established company. This vision may involve radical changes to company traditions,
processes, or products. The intrapreneur typically has directly applicable skills and
experience to bring to the job.

Copreneur

When your personal and professional lives are so intertwined, the stakes are high.
Business couples must learn to juggle their roles, share power and decisions, and balance
life and work, all while owning and running a business. CopreneurCPR is dedicated to

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helping entrepreneurial couples manage these challenges and the many others they face
in starting or growing a business together.

Career opportunities as Entrepreneur

1. Mid-level management

At big companies, the C-level folks develop ideas, the ground force does the work, and
mid-level management converts the idea into execution. Graduates with entrepreneurial
degrees are well suited for this opportunity.

2. Business consultant

The Fortune 500 is ripe with business consultants. They need people who can go to a
client site, identify problems and fix them. That is what an entrepreneur does, and that is
why this job is perfect for you. You have the training to help identify things that others
may not pick up on and the training to know how to fix them.

3. Sales

Someone who works in sales or runs the department needs to know how businesses run.
They need to know how to represent a company, manage accounts, and follow up on
leads.

4. Research and development

To work in R&D, you need to understand business concepts, procedures, and practices.
With all of the training and education someone has received learning about
entrepreneurship, they are well prepared for this type of position.

5. Not-for-profit fundraiser

Being able to raise funds requires understanding the importance of business and
networking relationships. It is a great place for someone with this type of degree because
you will have experience in studying advanced concepts that can be used to your
advantage on the job.

6. Teacher

Now here me out on this one. I am not suggesting that you go teach entrepreneurship. I
suggest you teach a core competency (e.g., math, history, literature, etc.), but teach
students the entrepreneurial side. Teach them the benefits of math to business, history
to innovation, and literature to persuasive advertising.

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7. Recruiter

Having had courses that cover operations management, leadership, and a variety of
others, you most likely have a keen sense of what type of person is needed to fulfill a
position. Companies who use recruiters rely upon someone being not just people savvy,
but having an in-depth business sense as well.

8. Business reporter

If you can write articles, or pick up a quick class to learn it, you are in a prime position to
take the lead on covering a local business beat. You will understand the field and concepts
and can use your knowledge to make the business section that much more interesting
and telling.

Entrepreneurship Opportunities
India is emerging country; it has large opportunities for entrepreneurs to start up new
business and expand the old one. The opportunities are available in almost all sectors at
initiation level as well as expansion level. Also it is big market in the world as per diversity
and population point of view in the world. This research has identified the opportunities
in the fields explained below.
1. Tourism Sector
Tourism has a wide opportunities in India because domestic and foreign tourist rising
every year. India has heritage sites, hills stations, beaches, diverse culture, wild life, rural
life etc. Attract tourist. The number of tourist is increasing year by year in India because
of this sector must be well organised and require well trained professionalism persons
and good hospitality. Therefore, lot of opportunities for entrepreneurs in the field
tourism like; provide good transport facility, hotels, available guides to tourist etc.

2. Energy Sector
There are broad opportunities in this sector because day by day the requirement of
energy is rising due to many reasons like; betterment in living standards, industrial
development, agriculture development, population rise etc. To fulfil the energy demand,
there is need of production of energy, supply electrical device and supporting accessories,
agriculture irrigation machinery and equipments etc. The green energy is new field into
this energy sector have a lot of opportunities to develop solar power plants, manufacture
and sale domestic solar equipment etc.

3. Automobile Sector
India is second largest automobile growing market after China. At large level automobile
and components is manufactured in India. Foreign countries are shown their interest to
setup there plant in India and some has already started. A lot of opportunities for

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entrepreneurs are available in; manufacturing of automobile components, supply spare

parts and lubricants, supply of fuels, service centers etc.

4. Textile Sector
Textile is one of the oldest and fastest growing sector. India export 11% of world’s total
requirement. There are two broad segments of textile. One is the organised sector,
consists modern machinery and techniques for production and second is unorganised
sector consists of handloom, handicraft etc. The future of Indian textile is opportunistic
in both domestic as well as export. Therefore, a lot of opportunities are available in this
sector for entrepreneurs.

5. Waste Management and Recycling

India is second largest populated country in the world. In India there are so many type of
waste generating from industries, cities and agriculture but there is no strong and a
standard waste management policy. A strong waste management is requiring proper
category wise collection, handling, disposal, reuse or recycling etc. This sector has broad
opportunities for entrepreneurs to start recycling plant, energy production from waste,
waste treatment plant, waste collection services etc. There are few companies started
business in this fields and running successfully. Examples; Timarpur-okhla waste
management private limited, Synergy waste management, Antony waste handling cell
private limited etc.

6. Health Sector
There is a large opportunities in this sector due to more population and also a huge
demand of ayurvedic and herbal medicine because it provide permanent treatment of
disease as well as there is no side effect. Opportunities are available to provide health
services like; good hospitals, medicine manufacturing, biomedical engineering, online
marketing of equipments and medicines etc.

7. Organic Farming
Organic farming is growing sector. The demand of organic fruits and grains is increasing
worldwide because it free from chemicals and fertilisers. This forming is environment
friendly and has large opportunities.

8. Media
In India there are huge opportunities in media. India government initiative “digital-India”
is also providing a motivation and several schemes to entrepreneurs. The entrepreneurs
can work in printing media, advertisement, news agencies, television channels, online
service etc.

9. Toys
Indian toy market is not well organised, it require organised approach for distribution
and marketing. India is importing toys from China, but still Indian design and taste is in

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demand due to Indian tradition and culture. Toys market of India is growing 15% to 20%
per annum. The business opportunities in toy sector are: toys for education, electronic
remote control toys, sponge toys, wooden toys, balloons making, toy store etc.
10. Packaging
The packaging is requiring almost every product to provide safety against damage. It has
commercially impact on all firms either directly or indirectly. This is fastest growing
industry in India. Opportunities are available for entrepreneurs to provide packaging
materials for machinery, chemicals, fertilisers, electrical and electronic devices, drinks,
food products, fruits packaging etc.

11. Transportation
India has wide opportunities in transportation because here lack of transport facilities.
e.g. public transport, good transports, air transport etc. The entrepreneur can start
transport service for public like online taxi service, travelling agency, goods transport
service, air taxi, transport service for agricultures, special transport service like;
medicines, livestock, fruits, chemicals, refrigerated vans or trucks, industrial large
equipment transportation etc.

12. Food Products

India is famous for their delicious foods. Also it is 2nd largest food producer of the world.
There are large possibilities of growth and expansion of in area like; producing,
consuming, export, store, transport, packing, refrigeration, canning etc. The quality
product demands and food service demands of consumers have opened up more
opportunities in country as well as outside of country in food processing and equipment
industry.

13. Training and Education

There is huge demand of skilled and trained employees in all over India. Government of
India is also making effort in this direction through “skill India” program. There is lack of
quality education and training facilities in India. Due to this, there are lot of opportunities
in the field of training and education. To strengthen the basic education good schools are
required. To provide knowledge and training; sports club, music schools, training centers,
computer centers, printing press etc. For a particular skill development, there must be
some training centers provide training in particular trade.

14. Supply and Marketing

There are huge opportunities in India for supply and marketing of goods. In India there
are lot of suppliers and marketing persons are required, for the supply and marketing of
products like automobile parts, home appliances, energy devices, food products,
electronics products, etc. Almost all sectors require supplier to supply the products to
their customers. It has many opportunities for entrepreneurs. The marketing is
important and essential activity for any product now a days withought which it is difficult

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to achieve target. Marketing businesses is somewhat difficult but have great

opportunities for entrepreneurs.

1.6 Entrepreneur and Entrepreneurship – Factors, Barriers &

Problems

Factors of an Entrepreneur in Business

Starting your own business can be a rewarding experience, as you have the chance to be
your own boss and the ability to earn an unlimited income. But the path to success is not
an easy one, and you're likely to face numerous obstacles and challenges along the way.
Your chances of success will be determined in large part on a number of important
personal factors.

1. Planning

According to CareerChoiceGuide.com, ineffective planning is a primary reason many

entrepreneurs fail. Preparing a thoughtful and comprehensive business plan can help you
foresee possible obstacles and develop ways to overcome them when they occur.
Contingency planning, such as having access to a backup financing source, can protect
against unexpected events such as the sudden loss of an important customer.

2. Perseverance

It can take time for a new business to gain traction, especially if the business concept is
new and unproven. An important entrepreneurial success factor is perseverance in the
face of adversity. A marketer of a new product, for instance, may need to make repeated
cold calls to potential buyers to find a few who are willing to take a chance on an
idea.CareerChoiceGuide.com indicates it often takes three to five years for a new business
to become profitable.

3. Risk Management

Starting a business introduces an element of risk, especially if you are leaving a stable job
with a regular salary. However, successful entrepreneurs know how to minimize risk by
making careful choices and decisions. You can minimize your risk by performing
extensive research and weighing the pros and cons of multiple options.

4. Enthusiasm and Belief

It can take a great deal of courage to launch your own business, so you need a great deal
of confidence in your ability to succeed. You also need to have a strong belief in your
business idea. Strong belief will help keep you going during the early stages when times

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can be difficult. It can also provide a source of enthusiasm that can provide motivation.
According to the Entrepreneur website, doing something you truly enjoy can also help
supply the necessary enthusiasm.

5. Level-headed Approach

Your ability to take a level-headed, analytical approach to your business is an important

success factor because it prevents you from making knee-jerk decisions based on
emotion. You'll also have a greater chance of weathering the inevitable down periods.
You'll be able to make a realistic evaluation of the status of your business at all times.

6. Relishing Challenges

Successful entrepreneurs are motivated by challenges. You'll face challenges throughout

your entrepreneurial career. At the beginning, you'll face the challenge of getting the
business off the ground. Once you're successful, you'll have to deal with challenges from
competitors who want to steal your customers and mimic your methods. Rather than
backing down from these challenges, successful business owners meet them head-on.

Barriers & Problems for New Entrepreneurs

Entrepreneurship comes with a host of challenges. Rewarding challenges, but harsh

challenges nonetheless. Experienced entrepreneurs have to deal with this no matter how
long they’ve been in business -- trying to establish a brand, adjust to match or exceed the
competition and keep your business profitable is a challenge no matter how many years
you’ve been in business.

But for new and young entrepreneurs, there are some unique challenges that are
especially difficult to overcome. If you’re just getting into the game, or you’re thinking
about becoming an entrepreneur, be prepared for these eight significant hurdles.

1. Abandoning another career

If you’re going to dedicate yourself to starting and nurturing a business to success, it’s
going to be nearly impossible to simultaneously manage another career. You might be
able to manage the infancy of your business on the side, during weeknights and
weekends, but if you want a chance of growing significantly, invariably you’ll have to quit
your day job.

Walking away from a promising, steady long-term opportunity for something

unpredictable is scary -- especially if you’ve never run a business before. Unfortunately,

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there’s no easy way to address this. Just think through your decision logically, and don’t
ignore your instincts.

2. Financing

Experienced entrepreneurs don’t have it easy when it comes to funding a new business,
but they do have a few advantages over newcomers. They might have a pool of capital
from a business they previously sold or a steady stream of revenue they can use to fund
a new business’s cash flow.

Even if their first business went under, they’ve likely made investment contacts and client
connections necessary to give them a leg up in a new enterprise. As a new entrepreneur,
you’ll be starting from scratch, which means you’ll need to start networking like crazy
and thinking through all your possible funding options before landing on one.

3. Teambuilding

This is especially hard if you’ve never run or managed a team before, but even if you have
management experience, picking the right team for a startup is stressful and difficult. It’s
not enough to find candidates who fill certain roles -- you also need to consider their cost
to the business, their culture fit and how they’ll work as part of your overall team. Such
considerations are exceptionally hard when you’re under the pressure of filling those
positions as soon as possible.

4. Being the visionary

As the founder of your startup, you’ll be expected to come up with the ideas. When a
competitor emerges, it will be your responsibility to come up with a response plan. When
your team hits an impenetrable obstacle, your job will be to come up with an alternative
plan to move forward.

This demands on-the-spot creative thinking -- which should be an oxymoron, but

entrepreneurs rarely have the luxury of time. The less experience you have, the more
pressure you’ll feel from this, and the harder time you’ll have coming up with acceptable
plans.

5. Dealing with the unknown

How long will your business exist? How profitable will your business be? Will customers
like your product? Will you be able to give yourself a steady paycheck? None of these
questions has a solid, reliable answer, even in startups based on great ideas with all the
resources they’d theoretically need.

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That unknown factor means your job stability is going to plummet, and many of your
long-term plans will remain in flux as new developments emerge. Dealing with this
volatility is one of the hardest parts of emerging as a new entrepreneur.

6. Loneliness

It’s a rarely mentioned problem of entrepreneurship, and many new business owners
aren’t prepared for it until it happens. Being an entrepreneur is lonely. It’s a singular
position, so you won’t have teammates to rely on (completely). You’ll be working lots of
hours, so you won’t see your family as often. And your employees will be forced to remain
at a bit of a distance.

7. Rule-making

It’s fun to be the boss until you have to enforce something. Sooner or later, you’ll have to
come up with the rules your business follows, from how many vacation days your
workers get to what the proper protocol is when filing a complaint about a coworker.
These details aren’t fun to create, and they aren’t fun to think about, but they are
necessary for every business.

8. Decision-making

Believe it or not, this is probably the most stressful challenge on this list. New
entrepreneurs are forced to make hundreds of decisions a day, from big, company-
impacting decisions, to tiny, hour-affecting ones. Decision fatigue is a real phenomenon,
and most new entrepreneurs will experience it if they aren’t prepared for the new level
of stress.

If you can work your way past these major obstacles, you’ll be well on your way to
establishing yourself as an entrepreneur. That isn’t to say they won’t continue to nag at
you as the years go on, or that new and varied challenges won’t arise to take their place,
but you’ll be prepared to handle yourself in those most volatile and impactful first few
months -- and that puts you far ahead of the competition.

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Unit 2
Entrepreneurship Development
2.1 Meaning
Entrepreneurship development is a program, method or process that aims to identify,
nurture, support and grow the talents in bigger level so that it brings new business
leaders in the market to reduce employment, health, educational, business,
environmental problems. The goal is to improve the living, the economic, social standard
thinking, and actions of people.

Definition of Entrepreneurship Development

Basically, entrepreneurship development is basically the process of improving the skill

set as well as the knowledge of the entrepreneurs. This can be done through various
methods such as classroom sessions or training programmes specially designed to
increase the entrepreneurial acumen.

Another definition of this term could be the process of enhancing the capacity to develop,
manage and organize a business venture while keeping in mind the risks associated with
it.

But instead of complicating things with big words and sophisticated terminologies, let us
understand it simply. The process of entrepreneurship development is nothing but
helping the entrepreneurs develop their skills through training and application of that
training. It instils in them the quality of making better decisions in the day to day business
activities.

Now that we understand the meaning of entrepreneurship development, let’s discuss the
process of entrepreneurship development.

Factors affecting for Entrepreneurship Development

Entrepreneurship is influenced by four distinct factors: economic development, culture,

technological development and education. In areas where these factors are present, you
can expect to see strong and consistent entrepreneurial growth.

These conditions may have both positive and negative influences on the emergence of
entrepreneurship. Positive influences constitute facilitative and conducive conditions for
the emergence of entrepreneurship, whereas negative influences create inhibiting milieu
to the emergence of entrepreneurship.

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Let us look at each one of them in details.

Economic Factors

Economic environment exercises the most direct and immediate influence on

entrepreneurship. This is likely because people become entrepreneurs due to necessity
when there are no other jobs or because of opportunity.

The economic factors that affect the growth of entrepreneurship are the following:

1. Capital

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

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

France and Russia exemplify how the lack of capital for industrial pursuits impeded the
process of entrepreneurship and an adequate supply of capital promoted it.

2. Labor

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

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

3. Raw Materials

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

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It is one of the basic ingredients required for production. Shortage of raw material can
adversely affect entrepreneurial environment. Without adequate supply of raw materials
no industry can function properly and emergence of entrepreneurship to is adversely
affected.

In fact, the supply of raw materials is not influenced by themselves but becomes
influential depending upon other opportunity conditions. The more favorable these
conditions are, the more likely is the raw material to have its influence of entrepreneurial
emergence.

4. Market

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

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

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

5. Infrastructure

Expansion of entrepreneurship presupposes properly developed communication and

transportation facilities. It not only helps to enlarge the market, but expand the horizons
of business too. Take for instance, the establishment of post and telegraph system and
construction of roads and highways in India. It helped considerable entrepreneurial
activities which took place in the 1850s.

Apart from the above factors, institutions like trade/ business associations, business
schools, libraries, etc. also make valuable contribution towards promoting and sustaining
entrepreneurship’ in the economy. You can gather all the information you want from
these bodies. They also act as a forum for communication and joint action.

Social Factors

Social factors can go a long way in encouraging entrepreneurship. In fact it was the highly
helpful society that made the industrial revolution a glorious success in Europe. Strongly

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affect the entrepreneurial behavior, which contribute to entrepreneurial growth. The

social setting in which the people grow, shapes their basic beliefs, values and norms.

The main components of social environment are as follows:

1. Caste Factor

There are certain cultural practices and values in every society which influence the’
actions of individuals. These practices and value have evolved over hundred of years. For
instance, consider the caste system (the varna system) among the Hindus in India. It has
divided the population on the basis of caste into four division. The Brahmana (priest), the
Kshatriya (warrior), the Vaishya (trade) and the Shudra (artisan): It has also defined
limits to the social mobility of individuals.

By social mobility’ we mean the freedom to move from one caste to another. The caste
system does not permit an individual who is born a Shridra to move to a higher caste.
Thus, commercial activities were the monopoly of the Vaishyas. Members of the three
other Hindu Varnas did not become interested in trade and commence, even when India
had extensive commercial inter-relations with many foreign countries. Dominance of
certain ethnical groups in entrepreneurship is a global phenomenon

2. Family Background

This factor includes size of family, type of family and economic status of family. In a study
by Hadimani, it has been revealed that Zamindar family helped to gain access to political
power and exhibit higher level of entrepreneurship.

Background of a family in manufacturing provided a source of industrial

entrepreneurship. Occupational and social status of the family influenced mobility. There
are certain circumstances where very few people would have to be venturesome. For
example in a society where the joint family system is in vogue, those members of joint
family who gain wealth by their hard work denied the opportunity to enjoy the fruits of
their labor because they have to share their wealth with the other members of the family.

3. Education

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

In India, the system of education prior to the 20th century was based on religion. In this
rigid system, critical and questioning attitudes towards society were discouraged. The
caste system and the resultant occupational structure were reinforced by such education.
It promoted the idea that business is not a respectable occupation. Later, when the British

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came to our country, they introduced an education system, just to produce clerks and
accountants for the East India Company, The base of such a system, as you can well see,
is very anti-entrepreneurial.

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

4. Attitude of the Society

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

5. Cultural Value

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

Psychological Factors

Many entrepreneurial theorists have propounded theories of entrepreneurship that

concentrate especially upon psychological factors. These are as follows :

1. Need Achievement

The most important psychological theories of entrepreneurship was put forward in the
early) 960s by David McClelland. According to McClelland ‘need achievement’ is social
motive to excel that tends to characterise successful entrepreneurs, especially when
reinforced by cultural factors. He found that certain kinds of people, especially those who

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became entrepreneurs, had this characteristic. Moreover, some societies tend to

reproduce a larger percentage of people with high ‘need achievement’ than other
societies. McClelland attributed this to sociological factors. Differences among societies
and individuals accounted for ‘need achievement’ being greater in some societies and less
in certain others.

The theory states that people with high need-achievement are distinctive in several ways.
They like to take risks and these risks stimulate them to greater effort. The theory
identifies the factors that produce such people. Initially McClelland attributed the role of
parents, specially the mother, in mustering her son or daughter to be masterful and self-
reliant. Later he put less emphasis on the parent-child relationship and gave more
importance to social and cultural factors. He concluded that the ‘need achievement’ is
conditioned more by social and cultural reinforcement rather than by parental influence
and such related factors.

2. Withdrawal of Status Respect

There are several other researchers who have tried to understand the psychological roots
of entrepreneurship. One such individual is Everett Hagen who stresses the-
psychological consequences of social change. Hagen says, at some point many social
groups experience a radical loss of status. Hagen attributed the withdrawal of status
respect of a group to the genesis of entrepreneurship.

Hage believes that the initial condition leading to eventual entrepreneurial behavior is
the loss of status by a group. He postulates that four types of events can produce status
withdrawal:

1. The group may be displaced by force;

2. It may have its valued symbols denigrated;
3. It may drift into a situation of status inconsistency; and
4. It may not be accepted the expected status on migration in a new society.

3. Motives

Other psychological theories of entrepreneurship stress the motives or goals of the

entrepreneur. Cole is of the opinion that besides wealth, entrepreneurs seek power,
prestige, security and service to society. Stepanek points particularly to non-monetary
aspects such as independence, persons’ self-esteem, power and regard of the society.

On the same subject, Evans distinguishes motive by three kinds of entrepreneurs

1. Managing entrepreneurs whose chief motive is security.

2. Innovating entrepreneurs, who are interested only in excitement.

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3. Controlling entrepreneurs, who above all otter motives, want power and
authority.

Finally, Rostow has examined inter gradational changes in the families of entrepreneurs.
He believes that the first generation seeks wealth, the second prestige and the third art
and beauty.

4. Others

Thomas Begley and David P. Boyd studied in detail the psychological roots of
entrepreneurship in the mid-1980s. They came to the conclusion that entrepreneurial
attitudes based on psychological considerations have five dimensions:

1. First came ‘need-achievement’ as described by McClelland. In all studies of

successful entrepreneurs a high achievement orientation is invariably present.
2. The second dimension that Begley and Boyd call ‘locus of control’ This means that
the entrepreneur follows the idea that he can control his own life and is not
influenced by factors like luck, fate and so on. Need-achievement logically implies
that people can control their own lives and are not influenced by external forces.
3. The third dimension is the willingness to take risks. These two researchers have
come to the conclusion that entrepreneurs who take moderate risks earn higher
returns on their assets than those who take no risks at all or who take extravagant
risks.
4. Tolerance is the next dimension of this study. Very few decisions are made with
complete information. So all business executives must, have a certain amount of
tolerance for ambiguity.
5. Finally, here is what psychologists call ‘Type A’ behavior. This is nothing but “a
chronic, incessant struggle to achieve more and more in less and less of time”
Entrepreneurs are characterize by the presence of ‘Type A’ behavior in all their
endeavors

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2.2. Entrepreneurship Development Program (EDP):

Entrepreneurship Development Programme (EDP) is a programme which helps in

developing the entrepreneurial abilities. The skills that are required to run a business
successfully, is developed among the people through this programme. Sometimes, people
may have skills but it requires polishing and incubation.

Objectives of EDP

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

b. Analyse environmental set up relating to small industry and small business.

c. Select the product.

d. Formulate proposal for the product.

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

f. Know the sources of help and support available for starting a small scale industry.

g. Acquire the necessary managerial skills required to run a small-scale industry.

h. Know the pros and cons in becoming an entrepreneur.

i. Appreciate the needed entrepreneurial discipline.

j. Besides, some of the other important objectives of the EDPs are to:

k. Let the entrepreneur himself / herself set or reset objectives for his / her enterprise
and strive for their realization.

l. Prepare him / her to accept the uncertainty in running a business.

m. Enable him / her to take decisions.

n. Enable to communicate clearly and effectively.

o. Develop a broad vision about the business.

p. Make him subscribe to the industrial democracy.

q. Develop passion for integrity and honesty.

r. Make him learn compliance with law.

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Contents:

1. General Introduction to Entrepreneurship:

First of all, the participants are exposed to a general knowledge of entrepreneurship such
as factors affecting small-scale industries, the role of entrepreneurs in economic
development, entrepreneurial behaviour, and the facilities available for establishing
small-scale enterprises.

2. Motivation Training:

The training inputs under this aim at inducing and developing the need for achievement
among the participants. This is, in fact, a crucial input of entrepreneurship training.
Efforts are made to inject confidence and positive attitude and behaviour among the
participants towards business.

It ultimately tries to make the participants start their own business enterprise after the
completion of the training programme. In order to further motivate the participants,
sometimes successful entrepreneurs are also invited to speak about their experiences in
setting up and running a business.

3. Management Skills:

Running a business, whether large or small requires the managerial skills. Since a small
entrepreneur cannot employ a management professionals /experts to manage his/her
business, he/she needs to be imparted basic and essential managerial skills in the
different functional areas of management like finance, marketing, human resource, and
production.

Knowledge of managerial skills enables an entrepreneur to run his/her enterprise

smoothly and successfully. That is why the saying goes that “One man control is the best
in the world (of business) if the man is big enough to control (manage) everything.”

4. Support System and Procedure:

The participants also need to be exposed to the support available from different
institutions and agencies for setting up and running small-scale enterprises. This is
followed by acquainting them with procedure for approaching them, applying and
obtaining support from them.

5. Fundamentals of Project Feasibility Study:

Under this input, the participants are provided guidelines on the effective analysis of
feasibility or viability of the particular project relating to marketing, organization,

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technical, financial, and social aspects of the project. Knowledge is also given how to
prepare the ‘Project’ or ‘Feasibility Report’ for certain products.

6. Plant Visits:

In order to familiarize the participants with real life situations in small business, plant
visits are also arranged. Such trips help the participants know more about an
entrepreneur’s behaviour, personality, thoughts, and aspirations. These influence him /
her to behave accordingly to run his / her enterprise smoothly and successfully.

Issues/Problems

EDPs in India are affected with a number of problems which are responsible for low level
of success of the programmes. The problems come from the trainers, trainees, the various
organisations imparting training programmes, the supporting organisation and even
sometimes the government. Some of the important problems faced by EDPs are narrated
as follows:

i. No clear-cut policy at the national level:

India do not have a clear-cut national policy on entrepreneurship. Therefore, the growth
and development of entrepreneurship put to a halt due to the antithetic attitude of the
supporting agencies like banks, financial institutions and other supporting agencies in
the absence of a policy at the national level.

ii. No clear-cut objectives:

Majority of institutions engaged in EDP are themselves not convinced and certain about
the task they are supposed to perform and objectives to achieve. They are conducting EDP
because they have to conduct the same.

iii. No clear cut course of action:

The course contents are not standardized and the agencies engaged in EDPs are
themselves not very clear about the course of action they are supposed to follow. There
is no accountability and feed back system for further improvement.

iv. Poor follow-up:

Institutions providing EDPs do not show much concern for objective identification and
selection of entrepreneurs. No follow-up actions follow EDPs after training.

v. Non-availability of Infrastructural facilities : EDPs are not successful due to non-

availability of adequate infrastructural facilities required for the conduct of EDPs. Rural

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and backward areas are lacking in proper class rooms, guest speakers, boarding and
lodging etc. for successful conduct of EDPs.

vi. Lack of commitment and involvement by the Corporate Sector:

Corporate sector shows less concern for the successful conduct of EDPs. They lack of
commitment and involvement in EDPs. There seems to be low institutional support
entrepreneurs.

vii. Non-availability of competent faculty:

The faculties selected for giving training are not sometimes competent enough to give
proper training to prospective entrepreneur. Even if competent and qualified teachers
available, they are reluctant to serve in rural and backward areas. This creates problem
smooth conduct of EDPs.

viii. Non conducive environment:

Non-conducive environment and constraints in the backward regions has become a

major problem for the conduct of EDPs. It makes the trainer-motivator’s role ineffective.

ix. Selection of wrong trainees:

There is no uniform procedure adopted by various agencies and institutions conducting

EDPs for the selection of trainees. This results in the selection of wrong trainees which
leads to low success rate of EDPs.

Phase of Entrepreneurship Development Programme:

Training Phase:

The main objective of this phase is to bring desirable change in the behaviour of the
trainees. In other words, the purpose of training is to develop ‘need for achievement’, i.e.
motivation among the trainees.

Accordingly, a trainer should see the following changes in the behaviour of the
trainees:

a. Is he/she attitudinally tuned very much towards his/her proposed project idea?

b. Is the trainee motivated to plunge into entrepreneurial career and bear risks involved
in it?

c. Is there any perceptible change in his entrepreneurial attitude, outlook, skill, role, etc.?

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d. How should he/she behave like an entrepreneur?

e. What kinds of entrepreneurial traits the trainee lacks the most?

f. Whether the trainee possesses the knowledge of technology, resources and other
knowledge related to entrepreneurship?

g. Does the trainee possess the required skill in selecting the viable project, mobilizing
the required resources at the right time?

Some of the questions listed above also answer the basic underlying assumption in
designing a suitable training programme for the potential entrepreneurs. Having trained
the trainees, the trainers need to ask themselves as to how much, and how far the trainees
have moved in their entrepreneurial pursuits.

Post-Training Phase (Follow-up):

The ultimate objective of Entrepreneurship Development Programme is to prepare the

participants to start their enterprises. This phase, therefore, involves assessment to judge
how far the objectives of the programme have been achieved. This is also called ‘follow-
up’. Follow-up indicates our past performance, drawbacks, if any, in our past work and
suggests guidelines for framing future policies to improve our performance.

Evaluation:

Earlier, Government and other agencies were responsible for supporting potential
entrepreneurs to set up their units specially in backward and tribal areas. In this context,
Small Industries Service Institute and SIET Institute in the sixties tried to fill the
information gap which existed and were relevant for small entrepreneurs.

“The entrepreneurs required a lot of information for setting up a business and in that
context the contribution of these programmes was essentially in the area of
disseminating knowledge on financial, technical and managerial aspects. To that extent,
these programmes were not basically programmes towards entrepreneurship
development, but were in the nature of supportive programmes for the existing and the
new entrepreneurs.”

However, it was visualised that creation of industrial development corporations and

other external facilities has failed to develop, an effective and sufficient condition for
entrepreneurship development.

There must be an effective framework to develop the qualities of the individual who
respond to the external opportunities i.e. availability of funds, financial incentives etc.

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Similarly, efforts should also be made so that social and organisational factors help
potential entrepreneurs to perceive the opportunities and learn to respond to them.

At present, existing entrepreneurs basically emerged out of the natural growth of

entrepreneurial talent of certain communities like Marwaris, Gujaratis, Parsi’s and South
Indian Brahmins. This type of entrepreneurs is a highly motivated group but problem is
that they be often interested in quick profits or high profits, opportunities which are
normally concentrated in the already well-developed areas.

So, it would be more important to have a broad-based entrepreneurial source to

command the tempo of economic growth. In this context, entrepreneurial training can
make a lot of difference in performance of the entrepreneurs. By motivating non-
entrepreneurial participants to start a viable enterprise, we can easily develop a valid
substitute for natural institutions like business families or existing entrepreneurs.

Entrepreneurship Development Programmes (EDPs) in India:

It will not be less than correct to say that India got the political freedom on 15 th August
1947, but not the economic freedom. And attainment of economic freedom i.e.,
emancipation from poverty and unemployment was the biggest challenge before the
country. The war for economic freedom started in 1950 in the form of planned
development. Then, it was realized that the way to get rid of poverty and unemployment
lies in the effective exploitation of hidden potential in the country. For this the policy
makers started advocating the promotion and development of small- scale industries in
the country. As a result, small – sector was recognized as employment- oriented sector
during the early sixties.

The employment-oriented thinking for small sector underwent changes by the end of
sixties and now small sector was recognized as an effective instrument to utilize the
entrepreneurial potential remained hitherto dormant in the country.

Realizing the various problems faced by the entrepreneurs in establishing enterprises,

the Government decided to offer promotional package to the entrepreneurs. Promotional
package included financial help and incentives, infrastructural facilities, and technical
and managerial guidance provided through various supporting organizations of the
Central, State and local levels.

This experience made the planners and policy makers realize that facilities and incentives
are, of course, necessary for establishing enterprises, but are not sufficient to solicit
adequate response from the entrepreneurs. Hence, now it was realized that emphasis on
human development is a necessary condition for entrepreneurship development. As
such, the serious thinking on entrepreneurship development began from here.

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Concerted efforts on entrepreneurship development in India started with the

establishment of Small Industry Extension and Training Institute (SIET), now NISIET, in
1962 in Hyderabad. SIET got an opportunity with support from Harvard University to do
pioneering work in entrepreneurship development in India.

SIET in collaboration with Prof. David C. McClelland of Harvard University conducted 5-

years’ training and research programmes in Rajamundi, Kakinada and Vellur towns of
Andhra Pradesh and Tamil Nadu. McClelland proved that, through proper education and
training, the vital quality of an entrepreneur, which McClelland called ‘need for
achievement’ (n’ ach) can be developed.

The fact remains that McClelland’s this successful experiment proved to be a seed for
entrepreneurship development in India which has by now become a movement as EDP
(Entrepreneurship Development Programmes) in the country.

It is against this background now the Government and financial institutions started
thinking to develop entrepreneurship in the country through training programmes. It
was the Gujarat Industrial Investment Corporation (GIIC) which for the first time started
a three-month training programme on entrepreneurship development in 1970.

This programme was designed to unleash the talent of potential entrepreneurs and some
selected entrepreneurs. Special emphasis was given on three aspects:

(i) Establishment of small-scale enterprises,

(ii) Its management, and

(iii) To earn profits out of it. By the latter half of 1970s’, the news of GIIC’s EDP spread to
the other parts of the country also.

A major initiative to foster economic development in the North East India took place with
the establishment of the North Eastern Council (NEC) in 1972. The main objective of the
NEC was to promote economic development of the NER through inter-state plans and
bring the NER to the mainstream of the country. This is a matter of great satisfaction that
the NEC has since been seriously involved in its task of regional development. Two more
significant efforts were initiated in 1973 with an objective to remove the economic
backwardness of the region.

One, the establishment of the North Eastern Industrial and Technical Consultancy
Organization, (NEITCO) to impart training on entrepreneurship development, and
second, the establishment of the Entrepreneurial Motivation Training Centers (EMTCs)
in its six district headquarters of Assam.

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Since EMTC was one of the oldest and noblest initiatives taken in the field of
entrepreneurship development in the country, some mention about the same seems
pertinent. The State Planning Board of the Government of Assam, under the dynamic
leadership of the then Chief Minister, took the initiative in requesting SIET Institute,
Hyderabad to be associated with training and research in the field of entrepreneurship
development in Assam with specific focus on self – employment for the educated
unemployed youth of the State (Mali 2000).

In response to it, the SIET Institute organized two training programmes for three weeks
duration each in 1973, for the officers of Government of Assam One training programme
was focused on entrepreneurship development for a selected band of officers from the
departments of industry, agriculture, animal husbandry, public works and other
departments and financial institutions of the Government of Assam.

The training programme included inputs like various methods and techniques of
identification and development of prospective entrepreneurs, development of
entrepreneurial personality, and identification of economic opportunities for setting up
small-scale enterprises in the State.

Functional areas of management for establishing and operating small enterprises on

sound lines were also included in the training programmes. Second the another
simultaneous training was imparted to the another group of officers of the industries
department to encourage people to establish small-scale industries, undertake industrial
potential surveys, select growth centers, plan infrastructure facilities, and develop
business profiles.

Integrated entrepreneurship development model and plan were evolved as a result of

SIET’s experience and realisation that entrepreneurship development is a multi-
disciplinary task, and the long-range plan should be executed through well coordinated
and orchestrated institutional support.

The integrated model of entrepreneurship development proposed by SIET included five

main components, namely:

(i) Local organization to initiate and support potential entrepreneurs till the break-even
stage,

(ii) Inter-disciplinary approach,

(iii) Strong information support,

(iv) Training as an important intervention for entrepreneurial development, monitoring

and evaluation, and

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(v) Institutional financing.

Initially EMTCs were established in six centers in Assam under the State Planning Board,
which were monitored by 26 officers trained by SIET in May 1973. The team in each
centre consisted of multi – disciplinary talents. It is learnt that in 1979, after a
comprehensive evaluation of the performance of EMTCs by SIET Institute, the
programme was transferred from the State Planning Board to the Industries Department.
Three more centers were added to the earlier six locations.

The nine EMTCs where the programme was being implemented were as follows:
Mangaldoi (Darrang District), Silchar (Cachar District), Diphu (Karbi Analong District),
Jorhat (Jorhat District), Dhemaji (Dhemaji District), Kokrajhar (Kokrajhar District), in
1973, Dibrugarh (Dibrugarh District), Nalbari (Nalbari District) and Nagaon (Nagaon
District), in 1979.

SIET and Small Industry Development Organisation (SIDO) through Small Industry
Services Institute (SISl) and Industrial Development Bank of India (IDBI) and Technical
Consultancy Organisations (TCOs) started organising EDPs.

The encouraging results of these efforts culminated to the establishment of Centre for
Entrepreneurship Development (CED), Ahmedabad in 1979. Here, it is noteworthy that
CED, Ahmedabad was the first centre of its kind wholly committed to the cause of
entrepreneurship development.

Inspired and influenced by the success of CED, Ahmedabad; the national-level financial
institutions such as IDBI, IFCI, ICICI and SBI with active support from the Gujarat
Government sponsored a ‘Nation Resource Organisation’, called ‘Entrepreneurship
Development Institute of India (EDI)’, Ahmedabad, in 1983.

This institute was entrusted with the responsibility of extension and institutionalization
of entrepreneurship development activities in the country which the Institute has been
discharging successfully.

Almost at the same time of establishment of EDI in 1983, the Government of India
established ‘National Institute for Entrepreneurship and Small Business Development’
(NIESBUD) to coordinate entrepreneurship development activities in the country.

In course of time, some State Governments with the support from national level financial
institutions established state-level Center for Entrepreneurship Development (CED) or
Institute of Entrepreneurship Development (lED).

By now, the twelve States, viz., Bihar, Goa Gujrat, Himachal Pradesh, Jammu & Kashmir,
Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Tamil Nadu, and Uttar Pradesh
have established either CED or lED. EDPs in these states were conducted by the TCOs

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before the establishment of CEDs or lEDs. According to the study of NIESBUD, some 686
organisations are involved in conducting EDPs in the country which have imparted
training to thousands of people by conducting hundreds of EDPs.

2.3. Entrepreneurship Development Training: Importance, Objective,

Methods

Entrepreneurship Development Training:

Many researchers agree that many training programmes do not address the real needs of
entrepreneurs. Garavan and O’Cinneide (1994a: 6) summarise the most significant
weaknesses of many entrepreneurial education and training programmes:
• Entrepreneurship education and training programmes are frequently of very
short duration compared with other educational programmes concerned with
helping people embark on a major career.
• While there is evidence that many of the entrepreneurship education and training
programmes are already highly committed to the owner-manager role and that
trainers are successful in raising commitment even higher, as well as reducing
doubts, there is parallel evidence to suggest that this mental preparation does not
go nearly far enough and that, indeed, it represents one of the major weaknesses
of many programmes.
• Many entrepreneurs are specialists within a particular field and tend to have a
poor grasp of the intricacies of managing across the range of functions. It is in
these situations that entrepreneurial skills are demanded: to work across
boundaries on complex, interrelated problems requiring the ability to take a
holistic view and exercise skills of analysis and synthesis.
• Trainers often try to accommodate too wide a range of start-up businesses within
a single programme. It is usual to group together people who are starting a diverse
range of small businesses and to offer them a more or less common skills
programme.

Objectives of entrepreneurial training

• To let the entrepreneur set or reset the objectives of his business and work
individually and along with his group for their realisation.

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• To prepare him for accepting totally unforeseen risks of business after such
training.
• To enable him to take strategic decisions
• To enable him to build an integrated team to fulfill the demands of tomorrow.
• To communicate fast, clearly and effectively
• To develop a broad vision to see the business as a whole and to integrate his
function with it.
• To enable him to relate his product and industry to the total environment, to find
what is significant in it and to take it into account in his decisions and actions.
• To enable him to cope with and coordinate all relevant paper work, most of which
is statutorily obligatory.
• To make him accept industrial democracy, that is, accepting workers as partners
in enterprise; and
• To strengthen his integrity, honesty, and compliance with law, the key to success
in the long run.

2.4. Role of Institutions in Entrepreneurship Development

Institutions provide guidance, allow for routines to develop and ultimately reduce the
uncertainty of social interaction. These functions are all faces of the same coin but can be
analytically distinguished to better flesh out the role institutions play.

1. Institutions provide guidance

If institutions frame the behavior of individuals, they also, as a consequence, structure the
incentives that individuals face in their activities. In other words, if one cannot win at
tennis by playing outside the lines or letting the ball bounce twice, then the players will
be motivated to develop the capabilities to play within the boundaries and to always run
to return the ball before it bounces a second time. If I know that I can only win by playing
within the lines, it will force me to become good at hitting the ball within the limits of the
court. This will also guide my actions and my expectations regarding what my opponent
in the game can or cannot do.

2. Institutions allow for routines

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By guiding actions, institutions facilitate social interaction in our daily lives. For instance,
driving on the right-hand side of the street is a rule which guides motorists in ways that
permit the coordination of cars. Such a coordination of vehicles happens because
everyone follows the same rule, which facilitates the choices drivers must make on the
road. As North explains, it is the existence of an imbedded set of institutions in our daily
lives which removes many difficult choices that, in the absence of institutions, would have
to be made in order to obtain social interaction.4 On the road, we don’t have to choose
which side to drive on every time we encounter another vehicle because we all accept
and follow the same rule.

3. Institutions reduce uncertainty

It follows that institutions reduce the uncertainty of social interaction by providing a
structure within which everyone can act. This function is very important because it allows
for the coordination of plans. Indeed, one could not interact socially in the total absence
of knowledge about what guides the actions of others in the social context. If I don’t know
the rules which my opponent will follow, I cannot engage myself in a tennis tennis game
because it would be too uncertain. The same is true in the “economic game”. Because
institutions guide human action in the social context, they reduce the uncertainty of social
interaction. To go back to the “rules of the road” example, the uncertainty every driver
faces with regard to the actions of every other driver is reduced by the existence of rules.
Because of rules, driving on the road is more certain. With this analysis in mind, it is easy
to understand that in order for institutions to reduce uncertainty, they must be as stable
and predictable as possible over time so that they can be used as guiding tools in social
interaction.

2.6 Role of DIC for the Promotion of Small Scale and Cottage Industries

• DIC provides the information on sources of machinery and equipment.

• Promotes new industrial growth centers, electronic industries etc.,
• Conducts multiple training programs to encourage the entrepreneurs.
• Gives assistance to entrepreneurs under State Incentives scheme and funding
assistance through self-employment schemes.
• It allots raw materials to the concerned industries at district level.
• DIC gives the information about marketing and its assistance on participating
trade fairs/buyers-sellers meet and so on.
• Guidance regarding Import and Exports of specific goods and services.
• Improves the managerial capacity by organizing various seminars, workshops
etc.
• It clears the problems related to SSI Registration/Bank loan/Marketing of
production etc.
• Single window assistance through SIDA and District Industries Centers.
• Products standardization

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• Promotion of products under Non-conventional Energy Sources.

• Design and product development for handicrafts.

2.7. SISI – Small Industries Services Institute

1. To assist existing and prospective entrepreneurs through technical and

managerial counseling such as help in selecting the appropriate machinery and
equipment, adoption of recognized standards of testing, quality performance etc;

2. Conducting EDPs all over the country;

3. To advise the Central and State governments on policy matters relating to small
industry development;

4. To assist in testing of raw materials and products of SSIs, their inspection and
quality control;

5. To provide market information to the SISI’s;

6. To recommend SSI’s for financial assistance from financial institutions;

7. To enlist entrepreneurs for partition in Government stores purchase

programme;

8. Conduct economic and technical surveys and prepare techno-economic feasible

reports for selected areas and industries.

2.8. Role of EDII – Entrepreneurship Development Institute of

India
• Creating a multiplier effect on opportunities for self-employment,
• Augmenting the supply of competent entrepreneurs through training,
• Augmenting the supply of entrepreneur trainer-motivators, • Participating in
institution building efforts,
• Inculcating the spirit of 'Entrepreneurship' in youth,
• Promoting micro enterprises at rural level,
• Developing new knowledge and insights in entrepreneurial theory and
practice through research,
• Facilitating corporate excellence through creating entrepreneurs,
• Improving managerial capabilities of small scale industries,

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• Sensitizing the support system to facilitate entrepreneurs establish and

manage their enterprises,
• Collaborating with organizations to accomplish the above objectives.

2.9. NIESBUD – National Institute of Entrepreneurship and Small

Business Development

The National Institute for Entrepreneurship and Small Business Development is a

premier organization of the Ministry of Skill Development and Entrepreneurship,
engaged in training, consultancy, research, etc. in order to promote entrepreneurship and
Skill Development. The major activities of the Institute include Training of Trainers,
Management Development Programmes, Entrepreneurship-cum-Skill Development
Programmes, Entrepreneurship Development Programmes and Cluster Intervention.
NIESBUD has provided training to 11,46,209 persons as of March 31, 2018 through
44,035 different training programmes since inception. This includes 4,384 international
participants hailing from more than 141 countries throughout the globe.

Training:
• Assessing the training programmes and identifying the gaps to systematically
conduct training programmes, orienting them as well as motivating youth
towards entrepreneurship.
• Developing and Designing various communication media tools for promoting
the culture of entrepreneurship among different strata of society in the
country.
• Supporting and playing a catalytic role towards organizations engaged directly
or indirectly in developing and promoting entrepreneurship and self-
employment in the Country.
• Providing consultancy services in the area of entrepreneurship and Skill
Development especially for MSDEs.
• In addition to above, Also Providing consultancy services to other Institutions
engaged in entrepreneurial training either in the Government or in the Private
Sector.
• Designing, Conceptualizing and standardizing course curriculum for
entrepreneurship and skill development programmes.

Research & Development:

• Promoting research and development activities in the area of
entrepreneurship, particularly in MSDE sector. Undertaking documentation
and disseminating information related to entrepreneurship/ enterprise
development.

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• Developing and publishing literatures, articles, journals and information

material related to entrepreneurship/enterprise development/ Skill
Development/MSDEs
• Providing an interactive platform for exchange of ideas and experiences for
various targets groups mainly through seminars, workshops, conferences as
well as through training programs.
• Identifying the Problem and developing feasible solutions by conducting
research studies for generating knowledge and accelerating the development
of entrepreneurship.

Major Focus Areas :

• Creating a holistic environment to support entrepreneurship and skill
development within the Institute.
• Evaluating and revising the training programmes sponsored by NIESBUD so as
to fit in with the internal and external environmental changes with respect to
entrepreneurship and small business Development
• The institute is actively engaged in creating a positive image among the general
public on entrepreneurship and eliminating the misconception related to it.
This helps in disseminating the information on entrepreneurship and skill
Development fruitfully.

2.10. NEDB – National Entrepreneurship Development Board

Objectives:

The main objective of the National Entrepreneurship Development Board (NEDB)

is promotion of entrepreneurship for encouraging self-employment in small scale
industries and small business.

Salient Features:

The scheme covers the following activities:-

• To identify and remove entry barriers for potential entrepreneurs (first
generation and new entrepreneurs) including study on entrepreneurship
development.
• To focus on existing entrepreneurs in micro, tiny and small sector and identify
and remove constraints to survivals, growth and continuously improve
performance.
• To facilitate the consolidation, growth and diversification of existing
entrepreneurial venture in all possible ways.

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