SANKARA COLLEGE OF SCIENCE AND COMMERCE

STAFF NAME: Dr.S.ESWARI

CLASS: III BCOM B

SUBJECT: ENTREPRENEURIAL DEVELOPMENT

UNIT-I

CONCEPT OF ENTREPRENEURSHIP

The word entrepreneur is derived from the French verb enterprendre, which means to
undertake. This refers to those who undertake the risk of new enterprises. An enterprise is

Entrepreneurship is the process of designing and running a new business venture for
earning profits. It is a process that brings innovation that is new ideas, products, and services
in the market.

Entrepreneurship is the ability to create, manage and operate a new business and bears
all of its risk with a view to earn profits. Entrepreneurship results in creativity, innovation,
employment opportunities and leads to the overall economic development of the country.

DEFINITION OF ENTREPRENEURSHIP

In economics, entrepreneurship combined with land, labour, natural resources and

capital can produce profit. Entrepreneurial spirit is characterized by innovation and risk
taking, and is an essential part of a nation's ability to succeed in an ever changing and
increasingly competitive global marketplace.

A.H. Cole has defined entrepreneurship as “The purposeful activity of an individual

or group of associated individuals, undertaken to initiate, maintain, or earn profit by
production and distribution of economic goods and services”.

ENTREPRENEUR

Entrepreneur refers to a person who establishes his own business or industrial

undertaking with a view to making profit. “An entrepreneur is considered to be an originator
of a business venture. He takes the role of an organiser in the process of production.”
 Richard Cantillon, an Irish man living in France, was the first economist who
introduced the term ‘entrepreneur’ referring to the risk taking function of establishing a new
venture.

DEFINITION OF ENTREPRENEUR

Richard Cantillon says, “All persons engaged in economic activity are entrepreneurs.”

J.A. Schumpeter defined, “A person who introduces innovative changes is an

entrepreneur and he is an integral part of economic growth.”

INTRAPRENEUR

Meaning

An employee of a large corporation who is given freedom and financial support to

create new products, services, systems, etc., and does not have to follow the corporation's
usual routines or protocols.

A person who while remaining within a larger organization uses entrepreneurial skills
to develop a new product or line of business as a subsidiary of the organization Practice of
entrepreneurship in an established firm. Intrapreneurship applies the 'start up' style of
management (characterized by flexibility, innovation, and risk taking) to a secure and stable
firm. The objective is to fast track product development (by circumventing the bureaucracy)
to take advantage of a new opportunity or to assess feasibility of a new process or design.

DIFFERENCE BETWWEEN ENTREPRENEURSHIP AND INTRAPRENEUR

Basis of difference Entrepreneur Intrapreneur

1. Ownership
Entrepreneur is owner of the enterprise.
Intrapreneur is dependent on entrepreneur who performs the task of innovation.
2. Status
An entrepreneur is independent in his operations.
The intrapreneur is dependent upon entrepreneur.
 3. Capital formation
Entrepreneur himself forms capital
Intrapreneur does not form capital
4. Risk
Entrepreneur bears the risk involved in an enterprise
An intrapreneur does not fully bear the risk involved in an enterprise.
5. Operation
An entrepreneur operates from outside
Intrapreneur operates from within the organisation.
6. Guarantee of investment
Entrepreneur gives guarantee to the investors for their investment
Intrapreneur himself is a manager, so he manages from within. Question of
guarantee does not arise.
7. Management
Entrepreneur manages the enterprise from outside.
Intrapreneur is a professional manager.
8. Professional qualification
Entrepreneur need not possess professional qualification
Intrapreneur must possess professional qualification.

NATURE AND CHARACTERTISTICS OF ENTREPRENEUERSHIP

NATURE OF ENTREPRENEURSHIP

1) Creation of Enterprise

Entrepreneurship is a process that refers to the creation and running of a new

enterprise.

It is an activity under which a person called an entrepreneur starts a new venture using
a new idea.

2) Economic Activity

Entrepreneurship is an economic activity as it involves creating and running a new

business through optimum utilization of all combined resources.
 It ensures that all scarce resources are efficiently used for deriving better returns in the
form of profit.

3) Innovation and Creativity

It is the process of discovering new ideas and concepts and implementing them in
business ventures.

Entrepreneurship involves bringing innovation in the market by introducing new

products or process that delivers better service.

4) Risk Bearing

It is an activity which involves huge risk which every entrepreneur needs to undertake
for starting a venture.

New ideas developed and implemented by the entrepreneur are uncertain and may
result in losses.

5) Profit

Profit earning is the sole objective of an entrepreneur for undertaking risk.

Entrepreneurs start a new venture with a view to earning profits.

6) Gap Filling

Entrepreneurship is a process of recognizing and filling the gap between customer

needs and available products or services.

It focuses on removing the deficiencies from the currently available products to fulfil
the needs of customers.

7) Organizing Function

It is an organizing function that brings together different factors of production like

land, labour, and capital.

Entrepreneurship is concerned with coordinating and managing all resources engaged

within the enterprise.
CHARACTERTISTICS OF ENTREPRENEUERSHIP

1) Ability to Take Risk

Willingness to undertake risk is the most important characteristic of entrepreneurship.

Starting a new enterprise involves a lot of risk such as more chances of failure and therefore
entrepreneur should properly analyse such risk.

2) Visionary

Entrepreneurs should have a clear vision of his new venture for converting an idea into
reality. He should have proper planning regarding future activities for the attainment of
desired results.

3) Open Minded

Good entrepreneurs should properly analyze all prevailing situations in the market. They
should realize that every situation can be treated as an opportunity for business.

4) Goal Oriented

Entrepreneurship is a goal-oriented activity. Entrepreneurs create and start a new venture

with the purpose of earning profits by satisfying the needs of customers.

5) Flexible

Entrepreneurs should be flexible and should change according to the prevailing situations
in the market. Businessmen should consider and bring all required changes in their products
or service as and when required from time to time.

6) Confident and Well Informed

It is important for entrepreneurs to be confident about his ideas and abilities. He should
have proper knowledge regarding the industry and [‘the environment. Proper understanding
of all business policies will help in taking the right decision at the right time.

TYPES/ CLASSIFICATION OF ENTREPRENEURS

A. BASED ON FUNCTIONAL CHARACTERISTICS

 Depending upon the level of willingness to create innovative ideas, there can be the
following

1. Innovative entrepreneurs

These entrepreneurs have the ability to think newer, better and more economical ideas
of business organization and management. An innovative entrepreneur is one who introduces
new product, new service or new market. An innovative entrepreneur is also known as
modern entrepreneur. An innovative entrepreneur can work only when a certain level of
development is reached. These entrepreneurs introduce new changes and develop the
business after a certain level of development is reached. They invent new products. Such kind
of entrepreneurs can be seen in developed countries, as large sum of money can be diverted
towards research and development purposes.

Inventions like the introduction of a small car Nano by Ratan Tata, organized retailing
by Kishore Biyani, making mobile phones available to the common may by Anil Ambani are
the works of innovative entrepreneurs.

2. Imitating entrepreneurs

These entrepreneurs are people who follow the path shown by innovative
entrepreneurs. They imitate innovative entrepreneurs because the environment in which they
operate is such that it does not permit them to have creative and innovative ideas on their
own. Such entrepreneurs are found in countries and situations marked with weak industrial
and institutional base which creates difficulties in initiating innovative ideas.

3. Fabian entrepreneurs

The dictionary meaning of the term fabian is a person seeking victory by delay rather
than by a decisive battle. Fabian entrepreneurs are those individuals who do not show
initiative in visualizing and implementing new ideas and innovations wait for some
development which would motivate them to initiate unless there is an imminent threat to their
very existence.

4. Drone entrepreneurs

The dictionary meaning of the term drone is a person who lives on the labour of
others. Drone entrepreneurs are those individuals who are satisfied with the existing mode
and speed of business activity and show no inclination in gaining market leadership. In other
words, drone entrepreneurs are die-hard conservatives and even ready to suffer the loss of
business.

5. Social Entrepreneur

Social entrepreneurs drive social innovation and transformation in various fields

including education, health, human rights, workers’ rights, environment and enterprise
development.

B. BASED ON THE TYPE OF BUSINESS

1. Business Entrepreneurs

2. Trading Entrepreneurs

3. Industrial Entrepreneurs

4. Corporate Entrepreneurs

5. Agricultural Entrepreneurs

6. Retail Entrepreneurs

7. Service Entrepreneurs

8. Social Entrepreneurs.

1) Business entrepreneurs

Business entrepreneurs we those who conceive an idea to for a new product or service
and then create a business to convert their ideas into reality. These entrepreneurs may be
found in small business units or big enterprises. They concentrate both on production and
marketing activities. Example: A Printing Press, bakery or a textile unit.

2) Trading entrepreneurs

Trading Entrepreneurs are those who undertake trading activities. These entrepreneurs
do not concentrate on manufacturing activities. They give more emphasis on distribution and
marketing of goods. They identify potential markets, create demand for the product and
influence people to buy the product. Example: Agents and Wholesalers.
 3) Industrial entrepreneurs

Industrial Entrepreneurs are those who concentrate in industrial and production

activities. They identify the needs of the customers and manufacture a product according to
their needs. They are generally a product-Oriented entrepreneur. Example: A manufacturer of
Automobile spare parts, computer accessories.

4) Corporate entrepreneur

Corporate entrepreneurs are those who exhibit innovative skills in organizing and
managing corporate undertaking. Example: A Trust registered under the Trust Act.

5) Agricultural entrepreneur

An agricultural entrepreneur is one who concentrates on agricultural activities. These

entrepreneurs concentrate on activities like raising agricultural production, marketing of
fertilizers etc.

6) Retail entrepreneurs

Retail entrepreneurs are those who undertake trading activities. They have direct
contact with customers and hence they are customer oriented. Example: An entrepreneur
running a departmental store

7) Service entrepreneur

A service entrepreneur is one who provides services to customers. They make profit
by rendering services. Example: An entrepreneur running a hotel or dry cleaning unit.

8) Social entrepreneur

A social entrepreneur is one who provides importance to the society by serving them.
He concentrates on social issues and does not aim to make profit. Example: A person running
an orphanage.

C. BASED ON THE STAGES OF DEVELOPMENT

1. First Generation Entrepreneurs

2. Modern or Innovative Entrepreneurs

 3. Classical Entrepreneurs

4. Inherited Entrepreneurs

1. First generation entrepreneur

A first-generation entrepreneur is one who sets up an enterprise by his innovative

skill. He combines various factors of production and provides marketable product or services
by adopting innovative ideas. He is the first person to start an enterprise on his own.

Though such a person may have the family background of some business, such
entrepreneurs may also establish a certain business which may be unrelated to their family
business.

2. Modern entrepreneurs or innovative entrepreneurs

A modern entrepreneur is a dynamic entrepreneur. He always looks for changes and

responds to the changing demand of the market. His business ventures suits the current
marketing needs.

3. Classical entrepreneur

Classical entrepreneur is a stereo type entrepreneur. He aims at maximizing profits at

a consistent level. There may or may not be an element of growth. Survival of the firm is
given more importance by these entrepreneurs.

4. Inherited entrepreneurs

These entrepreneurs have inherited family business or possess experience from their
family business. These entrepreneurs may like to diversify a little from their family business.

D. BASED ON MOTIVATIONAL ASPECTS

According to motivational aspects, entrepreneurs shall be classified as Pure

Entrepreneurs, Induced Entrepreneurs, Motivated Entrepreneurs and Spontaneous
Entrepreneurs.

1. Pure entrepreneur

A pure entrepreneur is a person who is motivated by psychological and economic

factors. Entrepreneurial task is undertaken by them due to certain reasons. Ability to handle
risk, desire to enjoy better status, desire to get recognition in the society, thirst for making
money motivates a person to take up entrepreneurial activities.

2. Induced entrepreneur

Induced entrepreneurs are those who take up entrepreneurial task due to the incentives
and subside granted by the government. Financial and technical assistance provided by the
government motivates a person to start new ventures.

3. Motivated entrepreneur

They are motivated by the desire for their self-fulfilment. They emerge because of the
possibility of producing and, selling new products. They are also motivated by economic
factors.

4. Spontaneous entrepreneur

A person turns out to be an entrepreneur, because of the natural talent vested in him.
These entrepreneurs have self-confidence and emerge as challengers. They take up
entrepreneurial activity in order to tap their talents. They have great self confidence in their
talent and are highly resourceful.

E. BASED ON TECHNOLOGICAL ASPECTS

1. Technical Entrepreneurs

2. Non-Technical Entrepreneurs

3. Professional Entrepreneurs.

1. Technical entrepreneur

A technical entrepreneur is one who concentrates more on production activities. He

has got sound technical knowledge. He utilizes his technical knowledge and demonstrates his
innovative capabilities. He is also known as technocrat.

2. Non-technical entrepreneur

A non-technical entrepreneur concentrates more on marketing activities. He tries to

find out new strategies for marketing goods. He also promotes his business by employing
various marketing methods.
 3. Professional entrepreneur

Professional entrepreneur is a person who applies innovative ideas in setting up of a

business. He is interested in establishing the enterprises rather than managing it. Once the
business is established the entrepreneur will sell the business to someone else.

Other Types of Entrepreneur

1) Mompreneur

New name created to describe a multi-tasking mother who can balance both the
stresses of running a home-based business as an entrepreneur, and the time-consuming duties
of motherhood at the same time.

2) Ecopreneur

Entrepreneur who creates and sells environmentally friendly products and services
including organic food, recycling efforts, or green construction.

3) Infopreneur

An infopreneur as "a person who gathers, organizes, and disseminates information as

a business venture or as a value-added service."

4) Founder

The entrepreneur who started a business. If multiple entrepreneurs were involved in

the creation of the company, they are referred to as the founders. The origin of the word is
that a founder originally meant a person who forges steel; similarly, the founder of a company
is forging the new entity.

5) Archangel

A well-funded and well-known angel investor with a successful history of financing

entrepreneurs or start-up companies, who may lead a group of other angel investors in
financing promising business ventures,. The term may also refer to a consultant retained by a
consortium of angel investors to research and evaluate investment opportunities.
Role of entrepreneur in economic growth:

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

(1)Promotes Capital Formation:

Entrepreneurs promote capital formation by mobilizing the idle savings of public.

They employ their own as well as borrowed resources for setting up their enterprises. Such
type of entrepreneurial activities leads to value addition and creation of wealth, which is very
essential for the industrial and economic development of the country.

(2)Creates Large-Scale Employment Opportunities:

Entrepreneurs provide immediate large-scale employment to the unemployed which is

a chronic problem of underdeveloped nations. With the setting up of more and more units by
entrepreneurs, both on small and large-scale numerous job opportunities are created for
others. As time passes, these enterprises grow, providing direct and indirect employment
opportunities to many more. In this way, entrepreneurs play an effective role in reducing the
problem of unemployment in the country which in turn clears the path towards economic
development of the nation.

(3)Promotes Balanced Regional Development:

Entrepreneurs help to remove regional disparities through setting up of industries in

less developed and backward areas. The growth of industries and business in these areas lead
to a large number of public benefits like road transport, health, education, entertainment, etc.
Setting up of more industries leads to more development of backward regions and thereby
promotes balanced regional development.
 (4)Reduces Concentration of Economic Power:

Economic power is the natural outcome of industrial and business activity. Industrial
development normally lead to concentration of economic power in the hands of a few
individualswhich results in the growth of monopolies. In order to redress this problem a large
number of entrepreneurs need to be developed, which will help reduce the concentration of
economic poweramongst the population.

(5)Wealth Creation and Distribution:

It stimulates equitable redistribution of wealth and income in the interest of the

country to more people and geographic areas, thus giving benefit to larger sections of the
society. Entrepreneurial activities also generate more activities and give a multiplier effect in
the economy.

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

Entrepreneurs are always on the lookout for opportunities. They explore and exploit
opportunities,, encourage effective resource mobilization of capital and skill, bring in new
products and services and develops markets for growth of the economy. In this way, they help
increasing gross national product as well as per capita income of the people in a country.
Increase in gross national product and per capita income of the people in a country, is a sign
of economic growth.

(7)Improvement in the Standard of Living:

Increase in the standard of living of the people is a characteristic feature of economic

development of the country. Entrepreneurs play a key role in increasing the standard of living
of the people by adopting latest innovations in the production of wide variety of goods and
services in large scale that too at a lower cost. This enables the people to avail better quality
goods at lower prices which results in the improvement of their standard of living.

(8)Promotes Country's Export Trade:

Entrepreneurs help in promoting a country's export-trade, which is an important

ingredient of economic development. They produce goods and services in large scale for the
purpose earning huge amount of foreign exchange from export in order to combat the import
dues requirement. Hence import substitution and export promotion ensure economic
independence and development.

(10)Induces Backward and Forward Linkages:

Entrepreneurs like to work in an environment of change and try to maximize profits

by innovation. When an enterprise is established in accordance with the changing technology,
it induces backward and forward linkages which stimulate the process of economic
development in the country.

(11)Facilitates Overall Development:

Entrepreneurs act as catalytic agent for change which results in chain reaction. Once
an enterprise is established, the process of industrialization is set in motion. This unit will
generate demand for various types of units required by it and there will be so many other
units which require the output of this unit. This leads to overall development of an area due to
increase in demand and setting up of more and more units. In this way, the entrepreneurs
multiply their entrepreneurial activities, thus creating an environment of enthusiasm and
conveying an impetus for overall development of the area.

FUNCTIONS OF ENTREPRENEURSHIP

(i) Innovation and Creativity

Innovation generally refers to changing processes or creating more effective

processes, products and ideas.

For businesses, this could mean implementing new ideas, creating dynamic products
or improving your existing services. Creativity is defined as “the tendency to generate or
recognize ideas, alternatives, or possibilities that may be useful in solving problems,
communicating with others. Creativity and innovation have always been recognized as a sure
path to success. Entrepreneurs think outside of the box and explore new areas for
cost-effective business solutions.

(ii) Risk taking and Achievement

Entrepreneurship is a process in which the entrepreneur establishes new jobs and

firms, new Creative and growing organization which is associated with risk, new
opportunities and achievement. It results in introducing a new product or service to society. In
general, entrepreneurs accept four types of risks namely Financial Risk, Job Risk, Social &
Family Risk & Mental & Health Risk, which are as follows:

(a) Financial Risk

Most of entrepreneurs begin by using their own savings and personal effects and if
they fail, they have the fear of losing it. They take risk of failure.

(b) Job Risk

Entrepreneurs, not only follow the ideas as working situations, but also consider the
current risks of giving up the job & starting a venture. Several entrepreneurs have the history
of having a good job, but gave it up, as they thought that they were not cut out for a job.

(c) Social and Family Risk

The beginning of entrepreneurial job needs a high energy which is time consuming.
Because of these undertakings, he/she may confront some social and family damages like
family and marital problems resulting on account of absence from home and not being able to
give adequate time to family.

(d) Mental Health Risk

Perhaps the biggest risk that an entrepreneur takes it is the risk of mental health. The
risk of money, home, spouse, child, and friends could be adjusted but mental tensions, stress,
anxiety and the other mental factors have many destructive influences because of the
beginning and continuing of entrepreneurial activity. This can even lead to depression, when
faced with failure.

(iii) Organization and Management

The entrepreneurial organization is a simple organizational form that includes, one

large operational unit, with one or a few individuals in top management. Entrepreneurial
management means the skills necessary to successfully develop and manage a business
enterprise. A small business start-up under an owner-manager is an example of an
entrepreneurial organization. Here, the owner-manager generally maintains strict control over
business operations. This includes directing the enterprise’s core management functions.
According to Mintzberg, these include the interpersonal roles, informational roles and
decision-making roles. The smaller the organization, the more concentrated these roles are in
the hands of the owner-manager. The entrepreneurial organization is generally unstructured.

(iii) Research

An entrepreneur is a practical dreamer and does a lot of ground-work before taking a

leap in his/her ventures. In other words, an entrepreneur finalizes an idea only after
considering a variety of options, analysing their strengths and weaknesses by applying
analytical techniques, testing their applicability, supplementing them with empirical findings,
and then choosing the best alternative. It is then that he/she applies the ideas in practice. The
selection of an idea, thus, involves the application of research methodology.

(iv) Overcoming Resistance to Change

New innovations are generally opposed by people because it makes them change their
existing behaviour patterns. An entrepreneur always first tries new ideas at his/her level. It is
only after the successful implementation of these ideas that an entrepreneur makes these ideas
available to others for their benefit. His/her will power, enthusiasm and energy help him/her
in overcoming the society’s resistance to change.

(v) Catalyst of Economic Development

An entrepreneur plays an important role in accelerating the pace of economic

development of a country, by discovering new uses of available resources and maximizing
their utilization. Today, when India is a fast developing economy, the contribution of
entrepreneurs has increased multi-fold.

QUALITIES OF A SUCCESSFUL ENTREPRENEUR

In order to organize and run it successfully, the entrepreneur must possess some
qualities and traits. They are as following:

1) Willingness to Make Sacrifices and Assume Risks: - A new venture is full of

difficulties and unanticipated problems. In such an inhospitable environment entrepreneur has
to be prepared to sacrifice his time, energy and resources in order to carry out the venture and
make it success.

2) Hard Work: - Willingness to work hard distinguishes a successful entrepreneur from

an unsuccessful one. For example, Assim Premji (chairman of Wipro) works in his office
fourteen hours every day. He is a successful entrepreneur. He is one of the richest persons in
India.

3) Optimism: - Successful entrepreneurs are not worried by the present problems that
they face. They are optimistic about the future. This enhances their confidence and drives
them towards success. Some of the world’s greatest entrepreneurs failed before they finally
succeeded.

4) Self Confidence: - This is the greatest asset of a successful entrepreneur. He must

have the confidence to make choices alone and bounce back when he fails.

5) Leadership: - Successful entrepreneur generally has strong leadership qualities. He

should be a good judge of human nature and a good leader. He must be able to select, train
and develop persons who can properly manage and control the labour force. McClelland
identified two main characteristics in an entrepreneur- (1) Doing thing in a new and better
manner. (2) Decision making under uncertainty. A successful entrepreneur must be capable
and well- informed a successful leader of men, a keen judge of things, courageous and
prudent. Above all he must be gifted with a large measure of practical common sense. There
are not many Fords, Tatas, Birlas, Thapars and Ambanis in the world. Entrepreneurship is not
limited to any class, community or religion. There is no age bar, for any person who
possesses certain behavioural traits and attitudes can work to become an entrepreneur.

Essential Qualities of an Entrepreneur

The essential qualities of an entrepreneur refer about the presence of the

entrepreneurial skills and attributes. The essential qualities which contribute to the success of
entrepreneurs are as follows.

1. Sound entrepreneurial education and training.

2. Entrepreneurial skills, attitude and temperament.

3. Achievement motivation and success-oriented endeavours.

4. Sound entrepreneurial mental health.

5. Entrepreneurial secrecy, liaisons, communication, dynasty and leadership.

6. Innovative spirit and risk-bearing capacity.

7. Strong dream and will to build his own kingdom.

8. Impulses to fight for the sake of success.

9. Desire to enjoy the fruits of entrepreneurial genius.

10. Living organs to sense the changing environment.

ENTREPRENEURIAL DEVELOPMENT PROGRAMMES (EDP)

After Independence it was found that most of the industrial growth was limited to a
few areas and confined to few top business houses. Government decided to encourage
entrepreneurial activities and ventures through various incentives in both industrially
backward and rural areas. Various agencies and institutions were engaged in entrepreneurship
development activity. Main thrust of these was to provide technological, financial, market
and morale support to the potential s of entrepreneurs, who act as catalyst agents of change.

EDP is essential for first generation entrepreneurs because they may not become
successful unless a proper training is received. It is a continuous process of motivating the
entrepreneur.

Need For EDP

• Entrepreneurs are the persons with a vision, with the urge to achieve and with the
abilities and competencies to bear the risks and achievements.

• EDPs play a vital role so that the entrepreneurs are motivated and develop
entrepreneurial skills to achieve the set goals.

• EDPs are essential for the country’s development in which the entrepreneurs use the
factors of production and generate employment opportunities.

• EDPs play a critical role in solving the problem of unemployment and involved in
poverty alleviation of the citizens of a country.

Objectives of EDP

The important objectives of the entrepreneurship programmes are developing and

strengthening the following qualities among the entrepreneurs.

(i) Analyzing environmental set up as to small business and industry.

 (ii) Selecting project.

(iii) Formulating the project.

(iv) Understanding the process and procedures of setting up of a small enterprise.

(v) Knowing the sources of assistance available for managing an enterprise.

(vi) Acquiring the necessary managerial skills for managing an enterprise.

(vii) Knowing the pros and cons of being an entrepreneur.

(viii) Acquainting the required entrepreneurial disciplines.

(ix) Identifying and training potential entrepreneurs.

(x) Providing post-trading assistance.

(xi) Accelerating business development.

(xii) Solving unemployment problem.

Phases of EDP

The potential entrepreneurs can solve many of their problems provided proper
training is given to them.

An EDP possesses the following three phases: (i) Pre-training phase (ii) Training
phase (iii) Post training phase i.e. Follow-up phase.

i) Pre-training phase

Refers to the activities and preparatory work made before the actual conduct of
training. In this phase, actual preparations are made for launching the Programme.

It involves the following activities:

(i) Selection of area.

(ii) Selection of course coordinator.

(iii) Arrangement of infrastructure.

(iv) Conducting the market survey to identify good business opportunities.

 (v) Formulating the programme which includes training programme organization,
trainer selection and training syllabus finalization etc.

(vi) Getting support from various agencies such as DICs, SFCs, SISI etc.

ii) Training Phase –

It involves three phases in it, which are as follows:

1. Raising motivational level i.e. Confidence building

The entrepreneurial training programmes are normally designed so as to raise their

motivation to a higher level. Each session in the training programme should aim at
strengthening their confidence and expanding their vision. Motivational level must be raised
to a greater extent because only motivated participants will take efforts to start a venture.

2. Improvement of Managerial talents

They must be made to understand the basic principles of management and to realize
the benefits and significance of the management functions like planning, organizing, staffing,
directing, controlling and coordinating. The various techniques involved in the management
process must be explained.

3. Developing the Technical Competence

The technical competence suitable to the product selected should be developed in the
participants. For this purpose, many details are required to be given to participants. Such as
details of technology, plant and machinery and its cost, the name of suppliers, its lifespan,
special features of the machinery etc., raw materials and their availability, special
characteristics and the like, manufacturing process and requirement of labour.

iii) Post-training phase

In this phase, assessment as to how far the objectives of the programme have been
achieved has been made. It indicates past performance, drawbacks if any in the past work and
suggests guidelines for formulating future policies.

This phase comprises the following steps:

(i) Registration of the enterprise.

 (ii) Arranging finance for starting the unit.

(iii) Guidance with respect to purchase of plant and machinery.

(iv) Providing land, shed, power connection etc. for establishing the project.

(v) Obtaining of licenses for scarce raw materials.

(vi) Granting incentives such as capital investment subsidy, interest subsidy, tax relief
etc.

(vii) Assistance by way of management consultancy.

(viii) Setting up marketing facilities.

(ix) Providing up-to-date information on the industry.

WOMEN ENTREPRENEURS

Women entrepreneurship is the process in which women initiate a business, gather all
resources, undertake risks, face challenges, provides employment to others and manages the
business independently. Women Entrepreneurship refers to business or organization started
by a woman or group of women.

Government of India based on women participation in equity and employment of a

business enterprise has defined women entrepreneurs as “An enterprise owned and controlled
by a women having a minimum financial interest of 51% of the capital and giving at least
51% of the employment generated in the enterprise to women”.

PROBLEMS OF WOMEN ENTREPRENEURS

The basic problem of a woman entrepreneur is that she is a woman. Women

entrepreneurs face two sets of problems specific to women entrepreneurs. These are
summarized as follows.

1) Shortage of Finance: Women and small entrepreneurs always suffer from

inadequate fixed and working capital. Owing to lack of confidence in women’s ability, male
members in the family do not like to risk their capital in ventures run by women. Banks have
also taken negative attitude while lending to women entrepreneurs. Thus women
entrepreneurs rely often on personal saving and loans from family and friends.
 2) Shortage of Raw Material: Women entrepreneurs find it difficult to procure
material and other necessary inputs. The prices of many raw materials are quite high.

3) Inadequate Marketing Facilities: Most of the women entrepreneurs depend

on intermediaries for marketing their products. It is very difficult for the women
entrepreneurs to explore the market and to make their product popular.

4) Keen Competition: Women entrepreneurs face tough competition from male

entrepreneurs and also from organized industries. They cannot afford to spend large sums of
advertisement.

5) High Cost of Production: High prices of material, low productivity.

Underutilisation of capacity etc account for high cost of production. The government
assistance and subsidies would not be sufficient for the survival.

6) Family Responsibilities: Management of family may be more complicated

than the management of the business. Hence she cannot put her full involvement in the
business

7. Occupational backgrounds of the family and education level of husband has a

direct impact on the development of women entrepreneurship.

8. Low Mobility: One of the biggest handicaps for women entrepreneur is her
inability to travel from one place to another for business purposes. A single women asking for
room is looked upon with suspicion. Sometimes licensing authorities, labour officials and
sales tax officials may harass them.

9) Lack of Education: About 60% of women are still illiterate in India. There exists a
belief that investing in woman’s education is a liability, not an asset. Lack of knowledge and
experience creates further problems in the setting up and operation of business.

10) Low Capacity to Bear Risks: Women lead a protected life dominated by the
family members. She is not economically independent. She may not have confidence to bear
the risk alone. If she cannot bear risks, she can never be an entrepreneur.

11) Social Attitudes: Women do not get equal treatment in a male dominated
society. Wherever she goes, she faces discrimination. The male ego stands in the way of
success of women entrepreneurs. Thus, the rigid social attitudes prevent a woman from
becoming a successful entrepreneur.

12) Low Need for Achievement: Generally, a woman will not have strong need
for achievement. Every women suffers from the painful feeling that she is forced to depend
on others in her life. Her pre-conceived notions about her role in life inhibit achievement and
independence.

13) Lack of Training: A women entrepreneur from middle class starts her first
entrepreneurial venture in her late thirties or early forties due to her commitments towards
children. Her biggest problem is the lack of sufficient business training.

14) Lack of Information: Women entrepreneurs sometimes are not aware of

technological developments and other information on subsidies and concessions available
to them. They may not know how to get loans, industrial estates, raw materials etc.

Remedies to Solve the Problems of Women Entrepreneurs:

The following steps may be adopted to solve the problems of the women
entrepreneurs:

1) Finance Cells: In various financial institutions and banks, special finance cells
should be opened for providing easy finance to women entrepreneurs. Such finance cells
should be managed by women officers and clerks. The finance cells should provide to women
entrepreneurs at low rates of interest and on easy repayment basis.

2) Marketing Co-Operatives: Women entrepreneurs should be encouraged and given

all assistance for setting up marketing cooperatives. The Government and semi-government
bodies should give highest preference to such women’s marketing cooperatives while making
their purchases. Such cooperatives will be able to eliminate the middlemen while making
their purchases of inputs and selling their products at remunerative prices.

3) Supply of Raw Materials and Other Inputs: The government should make
necessary arrangements for the supply of scarce and imported raw materials and other inputs
required by the women entrepreneurs. The government should also give subsidy to the
women entrepreneurs to make their products cost- competitive and sell them at competitive
prices.
 4) Education and Awareness: Intensive educational and awareness programmes
should be arranged so as to change the negative or unfavourable attitudes towards women.
The attitude of the elders, particularly, the elderly women whether mothers or mother-in-laws,
should be made aware of the potential of the girls and their due role in the society. The social
attitudes of these people should be made positive so as to enable the women entrepreneurs to
achieve progress in their venture.

5) Training Facilities: Training and skill development are quite essential for
development of entrepreneurs. Special training schemes should be designed so as to suit the
women entrepreneurs so as to create self-confidence in their mind about the success of their
entrepreneurship. Since family members will not be permitted to go too far distant places for
training, mobile training centres should be arranged. Similarly, part-time training facilities
should also be provided during week-ends and holidays. In addition, stipend, good hygienic
creches, transport facilities, and such other facilities should also be provided to attract more
and more women-entrepreneurs to the training centres.

SCHEMES FOR DEVELOPMENT OF WOMEN ENTREPRENEURS:

Government, banks and financial institutions have introduced different schemes for
the development of women entrepreneurs in India.

1. Development of Women and Children in Rural Areas (DWCRA)

2. Schemes of IDBI

a) Interest Subsidy

b) Refinance Facility

c) Mahila Udyam Nidhi (MUN)

d) Mahila Vikas Nidhi (MVN)

e) Indirect Loans

3. Scheme of Karnataka SFC.

4. Scheme of IFCI.

5. Rajasthan Financial Corporations Scheme.

 6. SBI‟s Stree Shakti Package.

7. SIDBI‟s Assistance.

8. BOI Priyadarshini Yojana.

1. Development of Women and Children in Rural Areas (DWCRA)

DWCRA is a scheme introduced by Government of India for the encouragement of

women entrepreneurship. Generally a woman is unable to start a venture (independently) due
to various reasons. The concept of teamwork has been introduced to make them courageous
enough to start their own enterprises. This idea has been incorporated into a scheme and the
Government implemented the scheme known as “The Development of Women and Children
in Rural Areas (DWCRA)”.

It is a sub-scheme of Integrated Rural Development Programme. Its objective is to

provide them with opportunities of self-employment. A distinguishing feature of DWCRA is
“Group Activity”. Women form groups of 10 to 15 to take up economic activities suited to
their skills and aptitudes. One woman among the group has to function as “Organiser”, to
manage, plan, and control the activities. The activity is selected by the group members and
not by the governmental agency. The activity selected must be economically viable.

2. Schemes of IDBI

Various schemes that are designed by the IDBI to assist women entrepreneurs are
detailed below:

a. Interest Subsidy Scheme:

Industrial Development Bank of India has formulated this scheme to encourage

entrepreneurial development among women. IDBI provides training and post-training follow
up expenditure upto Rs. 10,000. Successful trainees are eligible for interest subsidy up to Rs.
25,000 for one year if they start small scale unit. If the unit is medium scale, interest subsidy
payable is Rs. 50,000.
 b. Refinance Scheme

IDBI extends refinance facilities to banks and state financial corporations for their
credits to women entrepreneurs. It is 100% in case of SFCs, and 75% in case of commercial
banks.

c. Mahila Udyam Nidhi (MUN)

The IDBI has set up a special fund called Mahila Udyam Nidhi with a corpus of Rs.5
crores in order to provide seed capital assistance to women entrepreneurs who proposed to set
up projects in SSI sectors. The scheme is implemented by SIDBI.

Women entrepreneurs who can start and manage an enterprise with a minimum
financial status of 51 percent of the equity are eligible for assistance under this scheme.

However the project cost excluding working capital should be less than Rs. 10 lakhs.
Here the following norms are followed by SIDBI:

1. Debt equity ratio should be 3:1.

2. Seed capital assistance is provided in the form of soft loan up to a maximum of 15

percent of the fixed cost.

3. Minimum promoter‟s contribution is 10 percent of the fixed cost.

4. Service charge of 1 percent per annum is charged.

5. Repayment period is 10 years including an initial moratorium period of 5 years.

6. Seed capital assistance is provided without insisting on security.

d. Mahila Vikas Nidhi(MVN)

Mahila Vikas Nidhi extends assistance to the voluntary agencies that are engaged in
extending to the entrepreneurs training in production methods, management and skill
upgradation.

e. Indirect Loans

IDBI has introduced another scheme under which it grants indirect loans. It is called
indirect loans because loans are granted through state finance corporations and state industrial
development corporations. The scheme is now transferred to Small Industries Development
Bank of India.

3. Scheme of Karnataka SFC

With a view to encourage women entrepreneurs to start enterprises, the corporation

grants loans up to Rs. 60 lakhs for private and public limited companies, and up to Rs. 30
lakhs to proprietorship and partnership concerns. Interest rates are 12% for backward areas,
and 13% for all places of Karnataka other than Bangalore metropolitan area, and North and
South Taluks of Bangalore. In case of prompt repayment of principal and interest there is a
rebate of 1% is allowed on interest. Repayment is to be made within a period of 8 years.
Karnataka Government provides 5% investment subsidy to the tiny and small scale units.
Sales tax exemption is available for the women enterprises, up to 100% of the value of fixed
assets for a period of seven years. In the allotment of scarce raw materials, Government gives
the women entrepreneur’s priority. They enjoy priority in the allotment of lands and shed
also.

4. Scheme of IFCI

Industrial Finance Corporation of India grants interest subsidy up to Rs. 20,000 to

industrial units set up by women entrepreneurs.

5. Rajasthan Financial Corporation of India

In order to promote enterprises by women entrepreneurs, Rajasthan Financial

Corporation grants loans up to Rs. 10 lakhs. Contribution towards share capital by the
entrepreneurs is 10% of the project cost. It allows seed capital assistance up to 15% of the
project cost.

6. SBI Stree Shakti Package

The SBI introduced Stree Shakti Package in the year 1989 with a view to develop
women entrepreneurs. Under this scheme, EDPs are exclusively designed for women
entrepreneurs, and are conducted. They are organised with the help of SBI staff training
college and the local branches. The branch managers and the field officers of the banks would
provide necessary support and assistance to women who want to set up enterprise.
 In this scheme, financial assistance to the extent of Rs. 25,000 can be provided to the
women entrepreneurs without keeping collateral security or guarantee. Further, a discount of
half percent is allowed on the interest charged.

7. SIDBI’s Assistance for Women entrepreneurs

The Small Industries Development Bank of India (SIDBI) has designed special
schemes for providing financial assistance to women entrepreneurs. These schemes aim at the
following objectives:

1. Providing training and extension services according to their small socio-economic

status.

2. Providing financial assistance at concessional terms to help them in setting up tiny

and small units. These schemes are basically operated through State Financial Corporations
(SFCs), and State Industrial Development Corporations (SIDCs) etc.

8. Bank of India’s Priyadarshini Yojana

The scheme aims at providing financial assistance to the women entrepreneurs who
come under the following categories:

1. Small business, e.g. beauty parlour, laundry, lending library, etc.

2. Retail traders, e.g. fair price shops, general stores, etc.

3. Road transport operators, e.g. auto rickshaws.

4. Allied agricultural activities.

In this case, the maximum loan amount is up to Rs. 2 lakhs for term loans, and up to
Rs.1 lakh for working capital. The assets acquired with bank finance will need to be
hypothecated to the banks as security. Repayment period is normally for a span of three to
five years. The margin money to be departed by the promoter is usually 20 percent depending
upon the type of activity.

Rural Entrepreneurship

Rural entrepreneurship has arisen as a dynamic concept. It is generally defined as

entrepreneurship emerging at village level which can take place in a variety of fields of
attempt such as commercial, manufacturing, agriculture and acts as an effective factor for
economic development.

“Entrepreneurship development at village level which can take place in a variety of

fields of enterprise such as business, industry, agriculture and acts as a powerful factor for
economic development can be defined as Rural Entrepreneurship.”

Rural Entrepreneurship: Meaning and Definition: In simple words, rural

entrepreneurship implies entrepreneurship emerging in rural areas. In other words
establishing industries in rural areas refers to rural entrepreneurship. This means rural
entrepreneurship is synonymous with rural industrialization.

1. According to Khadi and Village Industries Commission (KVIC):

―Village industry or rural industry means any industry located in rural
area, population of which does not exceed 1000 or such other figure which
produces any goods or renders any services with or without use of power
and in which the fixed capital investment per head of an artisan or a
worker does not exceed a thousand Rupees‖.
2. According to the Government of India: An industry located in rural
area, village or town with population of 20,000 and below and an
investment up to Rs. 3 corers in plant and machinery, land and building is
classified as village industry.

Rural industry or village industries are generally classified into the following categories:

1. Agro Based Industries

2. Forest Based Industries
3. Mineral Based Industry
4. Textile Industry
5. Handicrafts
6. Engineering and services

1. Agro Based Industries

This category of village industries involves direct sale or processing of agro based
products such as dairy and dairy products, Vegetable processing, fruit processing such
 as fruit juices or pulps, pickles, joggery, processing of oil from oil seeds, sugar
industries, spices, cleaning and grading of grains, cereals, Pulses Mills etc.

2. Forest Based Industries

Forest based industries include products manufactured from processing raw material
from the forest such as wooden products, bamboo products, beedi making, coir
industry, honey making, etc.
3. Mineral Based Industry
These include quarrying, rock crushing, cement industries, wall coating powders etc.
4. Textile Industry
These include Cotton Ginning and Pressing, knitting, dyeing, spinning and bleaching,
sericulture etc.
5. Handicrafts
These include making of wooden or bamboo handicrafts that are local to that area,
old-fashioned decorative products, toys and all other forms of handcrafts typical to the
region.
6. Engineering and Services
These include agricultural tools, tractors and pump sets, repairs etc.
Summary
The entrepreneurs provide a magical touch to an organization, whether in
public or private or joint sector, in achieving speed, flexibility, innovativeness, and a
strong sense of self-determination. They bring a new vision to the forefront of
economic growth.

SELF ASSESSMENT QUESTIONS

1. Explain in brief the concept of entrepreneur.

2. Give various definitions of entrepreneur.
3. Explain the term Entrepreneur and entrepreneurship.
4. Enumerate the Nature and Characteristics of Successful Entrepreneurs
5. Enumerate the characteristics of entrepreneur.
6. Distinguish between entrepreneur and Intrepreneur.
7. Explain in brief the functions of entrepreneurs.
8. Explain in brief classification or Types of entrepreneurs.

9. Explain in brief the concept of entrepreneurship

10. Explain in brief the role of entrepreneurship in economic development.

11. Explain the concept of EDP and its objectives

12. Define women entrepreneur and discuss its functions

13. Define various problems of women entrepreneurs

14. What are the remedies for the problem of women entrepreneur.

15. List out the rural industries in India.

16. Explain EDP and its need and objectives

17. Explain the term phases of EDP.