Entrepreneurship

(Perspective and Environment)

 Definitions
Entrepreneur (Oxford Dictionary) – Person who undertakes an enterprise with chances of
profit or loss. (As I have understood, Entrepreneur is a person who undertakes a business activity of which
he has no background and faces considerable risks in the process. If either of the two elements, i.e., “no
background” or “considerable risk” is missing in the venture, it is no entrepreneurship).
Entrepreneur – (New Encyclopedia Britannica) – An individual who bears the risk of
operating business in the face of uncertainty about the future conditions.
Common Meaning – one who starts his own, new and small business
Some other related facts about
Entrepreneurship
Entrepreneurs are made; they aren’t born.
Incubator organization is an organization that supports entrepreneurs
Venture Capitalists – VCs are like bankers, but since they aren’t subject to strict
regulations as bankers, they take greater risks in making investments – organized as
formal businesses, they expect to reap 25– 30% annually and get more actively
involved in the ventures than bankers do.
Angels are private individuals who invest directly in firms and receive equity stake
in return – they act as advisers to founders.
• Don’t confuse entrepreneurship with running a business
How do you define an entrepreneur in
the 21s t Century?
An entrepreneur of 21st century is a customer focused innovator. He uses e–
knowledge.
Advantage is speed. He is a global thinker even though he may not necessarily be a global
player.
Advantages of Entrepreneurship
To an Individual
(a) Provides Self Employment for the entrepreneur
(b) Entrepreneur can provide employment for near & dear one as well
(c) Entrepreneurship often provides an employment and livelihood for next
generations as well.
(d) Freedom to use own ideas – Innovation and creativity
(e) Unlimited income / higher retained income – Bill Gates has risen to become
richest in the world in a single life time through entrepreneurship
(f) Independence
(g) Satisfaction
 Advantages of Entrepreneurship
To the nation
(a) Provides larger employment – Entrepreneurs provide employment for self as
well as other people and is source of employment creation.
(b) Results in wider distribution of wealth – This is a logical sequel of above issue. Higher the
employment, greater the income
(c) Mobilizes local resources, skills and savings
(d) Accelerates the pace of economic development – Entrepreneurship is the
govt’s one of the most trusted vehicles for economic development
(e) Stimulates innovation & efficiency distribution of wealth
Factor s Favoring Entrepreneurship
1. Developed Infrastructure Facilities – Availability of infrastructure reduces the cost
& efforts and improves viability of projects through higher profit margins.
2. Financial Assistance – Easy availability of cheap funds is vital for promoting
entrepreneurship.
3. Protective and Promotional Policies – Most of the entrepreneurship projects start
very small and have no resilience. They are extremely vulnerable to competitors,
market, money markets, etc, for considerable time. Favourable Govt policies shelter
them from such vagaries.
4. Growth of Education – Science, Technology & Management – Growth of
education is believed to be promoting entrepreneurship. However, there are enough
examples to suggest otherwise. A very large proportion of first generation
entrepreneurs are low educated
 Factor s Favoring Entrepreneurship
5. Risk Taking Abilities – Risk taking ability is one of the pillars of entrepreneurial spirits.
6. Hunger for Success (Capitalistic View) – Fire in the belly and dreams of riches is what
drives most entrepreneurs on this risky path. Any person content with what he has would
take the easier route of salaries job.
7. Environment/Culture Impact – Entrepreneurship is contagious.
8. Social Security – Social security acts as a safety net against failure of enterprise.
9. Technical/Industrial Training Facilities – Industrial Training facilities on one hand generate
skilled manpower so vitally required for setting up enterprises while on the other hand they
are also nursery for future entrepreneurs.
10. Globalization – Globalization has provided another avenue for business. Many dare
devils have taken a head– along plunge into this uncharted water and have written new
success stories.
What makes a Successful
Entrepreneur?
1. The urge for achievement (most often monetary ambitions) – Most Important
2. Willingness to take moderate risks – (High risk takers are not entrepreneurs but gamblers).
3. Determination to win
4. Win– Win Personality
5. Ability to identify & explore opportunities
6. Analytical ability to take strategic decisions
7. Perseverance
8. Flexibility
9. Capacity to plan and organize
10. Preparedness to undergo physical and emotional stress
11. Positive self concept/Self Belief
12. Future orientation – Vision
13. Ethics and Values – Mission
Who can be an Entrepreneur?
1. Who feels the need for achievement
2. Who can take moderate risks
3. Who possess skills in organizing
4. Who can capitalize on opportunities
5. Who has some financial strength – On his own or borrowed
6. Who has ability to work hard
7. Who has desire for responsibility
8. Who has a clear perception of probability of success
9. Who gets stimulation by feedback
10. Anyone – He can be male, female
11. Who does not have previous experience
 Characteristics of an Entrepreneur
1. Mental ability 10. Motivator
2. Clear objectives 11. Self– confident
3. Business secrecy 12. Long term involvement
4. H.R. ability 13. High energy level
5. Communication ability 14. Problem solver
6. Technical knowledge 15. Initiator
7. Achievement– oriented 16. Goal setter
8. Perseverance 17. Risk taker
9. Ethical
Key Elements of Entrepreneur
1. Need for Achievement
2. Risk taking
3. Organizing Skills
4. Ethics & Values
5. Vision
6. Innovation
ENTREPRENEUR’S BACKGROUND
& CHARACTERISTICS
1. Family Environment – In most cases, people follow the footstep of father. A
businessman’s son takes up business and a salaried person’s son tries to find a job.
2. Education – Education has no correlation with entrepreneurial spirit. If at all there
is one, it seems to be inverse. Most of the entrepreneurs come from low education
background. Educated people who get decent job rarely prefer comfort of salaried
job. It is only those who are unable to find a living for themselves eventually try
their hands at new business.
3. Age – There are people who start as early as probably 10 and some others after their
retirement.
 ENTREPRENEUR’S BACKGROUND
& CHARACTERISTICS
4. Physical Attributes – Have absolutely no correlation with entrepreneurial spirit.
5. Marital Status – No direct correlation but going by the age group, most entrepreneurs are married.
6. Working History – Entrepreneurs quite often have some working experience as a salaried
employee in the field of their venture. It always helps to learn a little about business before putting
your money in. Sindhi community follows this practice assiduously.
7. Family Contacts – Family contacts in business world reduce the risks and help the entrepreneur.
8. Professional Contacts – Professional contacts again help. IIT and IIM graduates venturing into
entrepreneurship often get help from their peer and seniors.
9. Personal values
10. Lifestyle – Most entrepreneurs are fond of good things in life but are willing to wait till they strike
rich. In the interim they are willing to rough it out.
 Key Definitions and Explanations
1. Knowledge – Collection and retention of information in a form that it can be effectively used.
2. Skill is the physical or mental ability to do something well (hard and soft skills)
3. Motives are reasons for doing something (need)
4. Traits – Characteristically way in which a person behaves or responds to a particular situation.
5. Attitude reflects the way of thinking and acting (Self and others determine the attitude)
6. Initiative – Willingness to take action solely on demand of the occasion without
being asked/prompted/forced by others. Taking actions to start the business and expand into new areas,
products and services.
7. Persistence – Repeated attempts to overcome obstacles despite failures. But a successful entrepreneur
analyses reasons for his failure, learns and modifies his methods every time. But wisdom of knowing when to
abandon attempts is more important that capacity to persevere in the face of obstacles.
8. Information Seeking – Information is power. Right information at the right time makes the job easier.
Knowing that flight has got cancelled before you leave home will save you time, money and spare frustration. A
successful entrepreneur invests in establishing information channels.
 Key Definitions and Explanations
9. Concern for High Quality of Work – Quality has no set standards. Eventually, it settles down to price – performance
ratio. Whether a company follows Cost Leadership or Differentiation strategy, it is value that customer perceives in
product which will sell the product in the market. Therefore, a entrepreneur has to be conscious of delivering value.
10. Efficiency Orientation – Constantly looking for ways to do things faster or with fewer resources or at a lesser cost.
11. Systematic Planning
(a) Breaking a large task into several sub tasks.
(b) Developing and using logical steps to analyze past events and forecast future developments.
(c) Developing plans after duly anticipating obstacles and opportunities.
(d) Evaluating alternatives on merits and demerits.
12. Problem Solving
(a) Identifying the root cause of the problem.
(b) Developing strategies in the light of objectives, resources, and constraints.
(c) Generating new ideas or innovative solutions.
(d) Identifying the best idea and applying to reach the goals.
 Key Definitions and Explanations
13. Persuasion – Persuasive ability is another key to success in entrepreneurial success.
14. Use of Influence Strategies – Using influence to get your job done is often at cross
roads with ethics. But every use of influence may not be unethical.
15. Assertiveness
(a) Confronting problems and issues with other directly
(b) Be polite but firm.
(c) Telling others clearly what they have to do.
(d) Reprimanding those who fail to perform as expected however close they may be.
16. Concern for Other’s Welfare – It is an important quality for team building which is
necessary if the initial success is to be translated into a larger success.
THANK YOU!
 Activity
Identify a local entrepreneur and research their motivation for starting a business.
Consider the following questions:
* Why do some people choose to become entrepreneurs?
* Do entrepreneurs have similar motivating factors?
* How important is wealth creation as a motivating factor