ENTREPRENEURIAL SKILLS - III

Question and Answers:

1. Who is an entrepreneur? Give an example.
An entrepreneur is a person who tries to meet needs of a customer through new
ideas or ways of doing business and makes profit in return. New ideas with which
an entrepreneur adds value to a business can be of many kinds, including new
products — like adding varieties, new services like home delivery or credit services,
new marketing ideas, new cost reduction ideas and many more.
2. What are the three types of business activities?
Manufacturing Business
A manufacturing business is one that converts raw material(s) into finished
product(s) to meet the demands of the customer.

Trading Business
A trading business does not manufacture a good or product but only facilitates the
act of bringing the finished goods from the manufacturing unit to the buyer or
customer (who is ready to pay for the produced good).

Services Business
Any business activity that is intangible, which cannot be seen and felt, but is for the
benefit of a buyer is called a service.
3. What is the difference between manufacturing and trading business activities?
Manufacturing Business Trading Business
1. Converts raw material(s) into does not manufacture a good or product
finished product(s)
2. the finished product can be Facilitates the act of bringing the finished
directly sold to the customer. goods from the manufacturing unit to the
buyer or customer.
3. Ex: Ex:
Kartik has a factory that Gupta Pharmacy sells medicines produced
produces purified packaged or manufactured by different
drinking water. pharmaceutical companies.
4. What values does the entrepreneur have?
a) Rohit runs a special hair salon in Bidar. Young boys come to him and ask him to
give a Justin Bieber haircut. Rohit doesn’t know about this haircut, so he
searches on the Internet and finds the pictures. What value does Rohit have?
Open-mindedness.
b) Shalu makes special Indian snacks and goes doorto-door in her town to sell it to
different people. Only1 in 10 people to whom she goes, buys her products. What
value does Shalu have?
Perseverance
5. What values does a successful entrepreneur have? Write any three values, with
examples.
Values are qualities and principles which make a person think and act in a certain
way. Values that a successful entrepreneur must have are:
a. Confidence
b. Independence
c. Perseverance
 d. Open-mindedness
Examples:
b. INDEPENDENCE: Poonam makes handmade purses for women in
Odisha. She takes the help of local women who know embroidery to
make the purses. Poonam used to sell these in Kolkata. She however,
could not sell many pieces and also had to spend a lot of time and
money on travelling to Kolkata. a. CONFIDENCE: Poonam then tried to
sell this by going door-to-door but only few more people bought her
products. In fact, people were rude and did not talk to her respectfully. c.
Perseverance: However, she did not give up hope and continued to go
to more people to sell the purses. She even added new styles and
designs to the purses and began making them in different sizes and
colours. d. Independence: Then someone told her about a shopping
website through which she could sell her products without going to big
cities. She immediately registered her company and started getting
orders. Earlier she could sell maximum 50 purses in a month, but now
she sells more than 500 purses every month.
6. Write the meaning of the following values with examples:
(a) Independence (b) Confidence
Independence
Independence means one’s ability to work alone and have the confidence to make
one’s own decisions. The responsibility of deciding what work needs to be done
and how it can be done is made by the entrepreneur.
Confidence
Confidence means to believe in oneself and one’s approach. Being confident helps
an entrepreneur to take the first step of starting a new business and then trying new
things to grow the business. It pushes the entrepreneur to keep going even if there
are failures.
7. Define the meaning of attitude. Give two examples of attitude of an entrepreneur.
The meaning of attitude is one’s tendency to respond in a certain way towards a
certain idea, object, person, or situation. An entrepreneur’s attitude affects their
choice of action while running the business.
8. Write the key differences in attitudes between entrepreneurs and employees.
Describe with examples.
Entrepreneurs Employees
1. An entrepreneur believes in self An employee is given training and
so that they can confidently face support to understand how to do the
any challenge and become work, and what to do when things get
successful. difficult.
2. An entrepreneur is responsible for An employee delivers on the goals set
ensuring that the business they are by the company.
doing adds value to the customer.
3. An entrepreneur is also An employee may not
responsible for running his or her have any direct responsibility
business ethically, following rules towards the customer.
and regulations set by the
government.
4. They themselves make decisions Employees decide how they want to do
and work towards completing the their work, but what they are doing and
work. in how much time they should complete
it, is decided by a senior.
 5. Ex: Ex:
Surabhi has always liked art and Akash works at a shop that sells art-
makes paintings. She started her supplies. His job is to arrange paint-
business of selling these paintings brushes, colours and papers in different
to her friends. They all liked the shelves. He goes to work at 9.00 am
paintings and asked Surabhi to and finishes by 4.00 pm.
make and sell more.
9. What are the key problems an entrepreneur may face while running a business?

An entrepreneur often thinks about these questions while starting and running a
business.
1. Idea: What should my business idea be? How do I know that this idea will work?
2. Money: How much money should be raised to start a business?
3. Acquiring material: From where to get the material and at what cost?
4. Manufacturing: How to manufacture (if it is a product business)?
5. Pricing: At what price should I sell the product so that I make enough profits?
How do I know what price the customer is willing to pay?
6. Marketing and advertising: How would I tell my customers about business which
will attract them to come to me?
7. Selling: How would the customer buy from me? Will the customer come to me or
will I go to the customer?
8. Accounting: How do I keep a track of the money I am spending and making?
How do I know how much profit I am making?
9. Standing out: How can I be better than what is already available in the market?
How do I add value to my customer?
10. Growing business: How can I grow my business and continue to get better?
10. What are different ways in which an entrepreneur can think to solve problems?

Three ways most entrepreneurs think when they are trying to solve a problem.
Creativity
Creativity means to come up with ideas that others have not thought of before.
Innovation
Innovation means to think of new ideas and come up with ways to make it work in
real life. The difference between creativity and innovation is that while creativity is
about just coming up with an idea, innovation is about also coming up with ways to
make idea into reality.
Critical Thinking
Critical thinking means to understand a situation or problem by asking oneself
questions (why, what, when, how) and researching about reasons for the situation
or a problem.
11. Define the meaning of a business idea.

A business idea is a solution that an entrepreneur thinks of, to serve the customer.
An idea determines what business activity an entrepreneur would take up to make
financial gains. An idea can be product-service based or a hybrid model.
12. What are the three principles of idea creation?

There are a few important principles to keep in mind while coming up with an idea.
Customer Need
An idea should serve the customer’s need or demand. A business idea can come
 from an existing demand in the market or through a desire to make what is available
in the market, better.

Entrepreneur’s Own Interest or Talent

An entrepreneur often works with an idea that she or he is passionate about.

Innovative
Innovative means new methods or original ideas. A business can be innovative in its
idea or the way it is done.
13. What are different ways of coming up with an idea? State different ways with an
example.
There are many ways in which one can come up with innovative, yet practical ideas
for a business.
Location-based Ideas
An entrepreneur can come up with idea to serve needs of customer at a specific
location. For example, in a small village in Rajasthan, where there is limited supply
of pure drinking water, an entrepreneur can set up a business of selling water.

Seasonal Ideas
During summers, people want to drink cold, healthy drinks in big cities, while in
winters, they like warm beverages. An entrepreneur can come up with the ideas
based on the season.

Events-based Ideas
Another way to come-up with a business idea is to think of ways to serve the people
at events. For example, there are different businesses that come up during the
wedding season, like card-designers and printers, mehendi (henna) designers, event
managers, decorators, etc.

Interest-driven Ideas
An entrepreneur can come-up with business ideas based on self-interest. For
example, someone who is good at dance and likes dancing, can start a dance-
training institute for serious dancers and also for people who want to slim down by
doing fun exercises.

Vocation-driven Ideas
Many people start a business based on what they are interested in and what they
have studied. A farmer, who knows everything about farming, from where to
get the seeds, to how to plough the ground can start a Farmer Training Institute for
those who want to learn about farming, or can guide city dwellers how to grow
vegetables on terraces and balconies.
14. Write any five business ideas that you would want to try out? Why have you chosen
these ideas?

15. What are the two ways of understanding the market?

The two ways of understanding the market:

1. Customer Needs and Preferences.
2. Competitive Business
16. What are the different aspects of understanding customer needs and preferences?
 Customer needs can be categorised into four types
of needs.
1. Served needs.
2. Partially served needs.
3. Unserved and known needs.
4. Unknown needs.

17. How can an entrepreneur find out about customer needs?

The above mentioned needs about the specific product or service can be found out
keeping in mind the following factors:
1. Quality and Quantity: An entrepreneur must understand what a customer’s
expectation in terms of the quality is.
2. Price: An entrepreneur must understand at what price the customer will be
willing to buy a product of a particular quality.
3. Location: Location means the place from where customers usually buy the
product or service.
4. Time: Time is also an important factor in understanding customer needs. An
entrepreneur should understand in which season or at what time of the day,
week or month, would a customer use the product or service.
5. Frequency: Frequency means the number of times a customer may buy the
product or service.
18. What are the different aspects of understanding competition?

The key aspects to keep in mind while understanding your competitors are:
1. Positioning: One should try and understand how the competitors position
their business. This means, how the enterprise wants its customers to see
them. One can be seen as a high-quality expensive brand, or they can be seen
as a low-cost,
2. Affordable brand. This is important information for an entrepreneur who is
starting new, since it allows them to decide how they would want their
potential customers to see them.
3. Pricing: Pricing means an understanding of the price at which different
competitors sell their product or service. Knowledge of competitor pricing
helps the entrepreneur to decide the price and quality of their own products
or service.
4. Offers: The next information that an entrepreneur can find out is about the
kind of offers that the competitors give to their customers, and why does a
customer go to them again and again? This knowledge will give the
entrepreneur ideas on how they can be different from their competitors.
5. Customer Relations: Another important information that must be understood
at this stage is how a business stays in touch with its customers and
maintains a relationship with them, so that they keep coming back, giving
repeat business.
19. How can an entrepreneur find out about competition?

To figure out what is available in the market and what the competitors are doing, an
entrepreneur should study all possible businesses. In a customer survey, one directly
goes and talks to the customer, but in a competition survey, an entrepreneur must
 observe and ask others these questions.
20. What is the meaning of business planning?

After the entrepreneur has decided what to sell, and checked if the customers are
willing to buy the product or service, the next step is to create a plan of action. This
is business planning.
21. Why is business planning important?

A business plan is important for an entrepreneur. Some of the reasons

why a business plan should be prepared are as follows:
(a) Estimating the money required to be spent:
Once the entrepreneur knows what product to sell and whom to sell it to,
the next step is to estimate how much money will be required to start
the business. Without an estimate of how much money is required, an
entrepreneur might invest too much money, or may start the business
without enough money to run the business.
(b) Estimating quantity of material required:
Knowing how much material is required helps an entrepreneur decide the
cost of making each product or cost of delivering the service.
(c) Standing out: A business plan also makes an entrepreneur plan how
they can make the customer see the business as standing out uniquely
when compared with competitors.
(d) Setting goals: Another important reason of having a plan is to set
ambitious, yet realistic goals. These goals motivate the entrepreneur to
work hard.
22. What are the important parts of a business plan?

1. Customer Group
2. Product/Service
3. Material Required and cost
4. Selling method and location
5. Price
6. Business activities and team
7. Unique selling preposition 1
8. Unique selling preposition 2
9. Customer goal
10. Profit goal
11. How can an entrepreneur improve and grow a business? State the principles.

After starting the business, an entrepreneur has to think about how they can continue
to improve and grow by creating value for the customer. There are mainly three
principles which can be followed to grow a business.

(a) Quality: An entrepreneur can improve the business by improving the quality of
the product or service which is offered to the customer. This will help the business
to stand out in the market and as a result, will justify the entrepreneur charging
a higher price. More inflow of money will help the business to grow. For example,
for a business of candles, an entrepreneur can improve on the quality by making
scented candles or candles in different colours or sizes.
(b) Scaling Up: Scaling up means growing the business by attracting more
customers. There are many ways a business can reach out to more and more
customers. One such way is to go to a different area where you will find new
customers. For example, selling candles in different housing societies where a lot of
people live instead of market where there is competition.
(c) Adding Substitutes: Another way of growing a business is by giving offers to
customers. Substitutes mean products and services which are similar to what is
already being sold. For example, selling candle stands along with candles.