An entrepreneur is a person responsible for setting up a business or an enterprise. He is one who has the initiative, skill or innovation and always looks for higher achievements. He works for the good of people and a catalytic agent for change.
Learn about: 1. Definitions of Entrepreneur 2. Classification of Entrepreneur 3. Types 4. Steps Taken 5. Competencies Required 6. Factors Influencing 7. Opportunities in Contemporary Business Environment
8. Differences between Labour and Entrepreneur 9. Differences between Profit Oriented Entrepreneur and Social Entrepreneur 10. Entrepreneurial Process vs. Technopreneurial Process
11. Measures and Initiatives of the State to Promote Entrepreneurship 12. Sources of Finance 13. Training 14. Lifestyle Entrepreneur (With Ways) 15. Consultancy 16. Tips for Becoming a Successful Entrepreneur 17. Laws
18. Economic Development 19. Difference between Entrepreneur and Manager 20. Motivation 21. Ultrapreneurs (With Characteristics) 22. Comparison between Entrepreneur and Enterprise 23. Ethics 24. Vision for Future.
Entrepreneur: Definitions, Functions, Classification, Types, Tips, Ethics and Vision for Future
Entrepreneur – Definitions
The word ‘entrepreneur’ is derived from the French word ‘entreprendre’, which means ‘to undertake’. This refers to those who undertake the risk of new ventures. In the early part of the 16th century, the Frenchmen who organized and led military expeditions were referred to as entrepreneurs. French tradition regarded an entrepreneur as a person translating a profitable idea into a productive activity.
During the year 1700 (i.e. in the 17th century), the architects and contractors of public works were called entrepreneurs.
In the early 18th century, French economist Richard Cantillon used the term ‘entrepreneur’ to business. In this way, the evolution of the concept of entrepreneur has created history over more than four centuries. Since then, the term ‘entrepreneur, has been used in different ways with divergent views. These views are classified into three different groups. They are entrepreneur as a risk bearer, as an organizer and an innovator.
In simple words, the term ‘entrepreneur’ refers to a person who creates an enterprise or an economic unit.
An entrepreneur is a person responsible for setting up a business or an enterprise. He is one who has the initiative, skill or innovation and always looks for higher achievements. He works for the good of people and a catalytic agent for change.
Some important definitions of an Entrepreneur are discussed below:
According to Richard Cantillon, “Entrepreneur is an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future”.
According to J.B. Say, “Entrepreneur is a person who searches for change, responds to it and exploits opportunities. Innovation is the specific tool of an entrepreneur.”
According to International Labour Organisation (ILO), “Entrepreneurs are people who have the ability to see and evaluate business opportunities; together with the necessary resources to take advantage of them; and to initiate appropriate action to ensure success”.
According to Peter F. Drucker, “Entrepreneur is a person who searches for change, responds to it and exploits opportunities. Innovation is the specific tool of an Entrepreneur”.
Entrepreneur – Classification
Classification on the basis of Clarence Danhof’s study of American Agriculture is as follows:
These entrepreneurs are the green shoots of a progressive economy. They sense the need for change, think out of the box, plan and take the risk of launching new products and services. They provide new venues of work; broaden the scope of an economy in terms of alternatives businesses, simplified processes and increased variety of products and services.
These entrepreneurs are not the first movers. They can be classified as followers of successful entrepreneurs. They do not contribute in terms of innovation and creativity but they do provide more employment opportunities and increase supply of new products. They are suitable for under developed economies where tried and tested technologies of developed nations can be employed with minimal customizations instead of reinventing the wheel.
They are shy and cautious movers. They are skeptical about following newly launched technologies or products. They enter such markets only when there is no other way-out. They are risk averse and hence avoid experimenting with processes. However, they eventually adopt changes instead of getting extinct.
These entrepreneurs are orthodox and unyielding. Their laggard attitude towards change does not let them adopt changes. They do not believe in responding to environmental changes and prefer to offer age-old products and services despite the risk of loosing out. They struggle to survive and have reduced returns due to resistance to change.
Arthur H. Cole’s classification is as follows:
a. Empirical – These entrepreneurs follow standardized processes and do not yearn to make changes or improvements. They follow rule of thumb instead of radical changes.
b. Rational – They are well aware of the changing needs and are also willing to change. However introduce those changes that seem to be more revolutionary.
c. Cognitive – These entrepreneurs keep themselves abreast with dynamics of environment and consult experts to devise newer ways. They take a lead in breaking away from the customs and walking on the self-charted paths.
Entrepreneur – 8 Popular Types
Entrepreneurs can be classified into the following popular types:
1. A Nascent entrepreneur is an individual, who is involved in the process of starting up right from the conceptualizing part. Since they have the desirability of starting a business, they want to achieve goals and can be very persevering.
2. A Novice entrepreneur is one who has no prior business ownership experience, but wishes to start a business for the first time.
3. A Habitual entrepreneur is one who has prior business ownership experience.
4. A Serial entrepreneur is one who has started and run businesses in the past, has run it successfully or closed it down, has either successfully sold it off to another person or logically brought it to an end. In other words, he routinely starts up and sells or closes down businesses.
5. A Portfolio entrepreneur is one who retains the original business and builds a portfolio of additional businesses around it, either through purchasing or starting up related or new businesses. When an opportunity is found, he or she looks at businesses more as a portfolio of investments, rather than just a passionate endeavour.
6. An Innovative entrepreneur introduces new ideas and products into the market. They create highly innovative solutions. For these kind of entrepreneurs to thrive an environment with technological and economical advance is required.
7. An Imitative entrepreneur is one who willingly adopts innovation or changes brought about by others. They adopt technologies proven in other parts of the world and create local ventures around them.
8. A Drone entrepreneur is one who refuses to change with times. Despite facing threat of extinction they stick to their current methods.
Entrepreneur – 8 Steps Taken by a Successful Entrepreneur
Steps taken by a successful entrepreneur who aspires to sustain his business in the long run:
Among all resources, human resources are very crucial for any business. They are irreplaceable. Enterprise needs talented people having valuable insights to elevate the business to new heights. Skilled and talented work force will lay a strong foundation for the company to take off successfully and penetrate down in the market also.
2. Broader Perspective:
A business can sustain in long run if it keeps its eyes and ears open to potential disruptions. The rate of success of business is determined by the rate of how quickly organization is able to sort those disruptions. Organization needs to consider market, community and society at large before taking any decisions. They cannot be myopic in their approach.
3. Futuristic Outlook:
Anticipating and acting according to the needs and wants of customers is very crucial. Proactive and futuristic outlook give time to a business to think and act in time to dominate and sustain the market in long run.
4. Alliances with Strategic Partners:
The strategy of finding appropriate partners who can bring synergies to the business can be useful for business in long run. An organization needs to find partners who can bring necessary skills, knowledge and expertise to the business.
For e.g. to have a larger and sustainable market share in Indian e-commerce space, Flipkart tied up with the global e-commerce giant Walmart, whereas Indian counterpart Reliance retail is looking forward to forge strategic alliance with Jackma’s Alibaba.
5. Appetite for Failures and Resilience:
Startups really dig hard to grow and take time to taste success. Quite often, presence of leaders in the industry take away the market share and result in failures. However, startups should not give up and must discover and eventually deliver novelty to end consumers.
6. Risk Bearing Capacity:
In today’s competitive world, no organization can work well without taking risk. For a startup, the risk is even more. It should be courageous enough to take the risk and should not be afraid of entering the unchartered waters. Keeping in mind the changing preferences of customers, investors and other stakeholders, entrepreneurs should experiment more often and lead their way to success.
7. Right Base of Clients:
Organization should prospect right kind of clients. Business should work with those clients that help them grow its business and sustain over in long run. Focus should be on building a long term relationship with clients. This will lead to mutual benefits for both.
8. Proactive Marketing Activities:
No business proposition is good for the business unless it brings robust sales and profit. For the same, firms need to market their products well and create awareness about the products. This will enable the potential buyer to know about its existence. Hence, it will result in boosting the sales volume and profit margins.
Further, it is important for hungry and enthusiastic startups to adopt a sustainable culture of best and progressive practices. Sustainable organization relish the advantages like cost reduction, access to new markets, new opportunities, increased employees engagement and improved stakeholders relations.
From the above discussion, it can be said that for a startup to sustain in long run, it has to innovate new ways of doing the business and offer those product/services which can provide value to its existing as well as potential customers.
Entrepreneur – Competencies Required
Self-competency explains the inherent strength of entrepreneurs. Self-competence is actually core competence. Core competence may be inherent in an entrepreneur and are based on the personal traits of the individual. If core competence is strong and positive towards business handling, one becomes a successful entrepreneur.
Entrepreneurs should be aware of themselves. ‘Understand Thy Self’ gives an insight into the competencies possessed by entrepreneurs. If an entrepreneur is self-conscious about his strengths and weaknesses, he can be successful as he adapts strengths at critical time. Hence, he should be aware of his strengths and weaknesses.
The competencies required for an entrepreneur are:
i. Capacity to organise a business and supervise it.
ii. Controlling the unit.
iii. Directing the business in right direction.
iv. Possessing innovative ideas and creativity.
v. Competency to manage time.
vi. Effective decision making.
vii. Capability to avail business as it comes.
viii. Capacity to manage funds and resources.
A self-competent person should be capable of converting all business threats into opportunities. Entrepreneurs should also undergo continuous training in those areas, where they can become top leaders and quality professionals. In areas where they are not strong they have to appoint professionals or outsource the jobs.
Entrepreneur – 11 Factors Influencing the Movement of Entrepreneurs from One Location to Another
Generally entrepreneurs move naturally from one place to another with a view to exploit available business opportunities wherever they are if all other things are constant. However, in moving places, an entrepreneur at times ends up sacrificing a few opportunities in the quest of some new ones. Entrepreneur mobility is an important and interesting feature of entrepreneurship development.
The following factors may influence the movement of entrepreneurs from one location to another:
Basically, any entrepreneur is an opportunity seeker. If a new place presents real opportunities then he or she would prefer to go there. The Indian society has a good number of such people who have moved from their native places to far and wide places and made successful entrepreneurs. For example, Sikhs, Marwaris, Patels, etc., are among enterprising Indian communities who have made successful businessmen in all parts of the world.
Raw materials or resource availability are the basic factors which influence the movement of entrepreneurs. It is natural for the enterprises to be located near the resources for certain business activities. So resources drive the people or attract people to their location. Interestingly, it is the entrepreneurial zeal which influences entrepreneurs to move closer to the resources.
For some type of industries backward and forward linkages influence the entrepreneurs to move on. Resources may be one factor but marketing opportunities, which are also called forward linkages to the industry, are essential for the success of the enterprise. So, backward and forward linkages play an important role for movement of entrepreneurs.
This is a major influential factor in driving entrepreneurs to different locations. If the whole family has the same wavelength pertaining to entrepreneurial perceptions, then the entrepreneur can move freely to different locations. Otherwise, their movement would be restricted.
If entrepreneurs have enough exposure to different environments by virtue of their early movement to different places, then that experience and exposure pays them in good stead as they seek opportunities in distant places.
Better educational background helps in providing a broad understanding about various places which ultimately favours the entrepreneurs to explore opportunities in new places and build an empire.
This is an important factor that could exert a positive and also negative influence in the movement of entrepreneurs. While knowledge of a new language can help forge relationships in new lands and influence business, at times the lack of it can prove to be a great disadvantage.
For instance, in a country like India where so many languages are spoken, it is difficult to know so many languages. For many people, this has proved to be a great obstacle for shifting to new locales in search of business.
viii. Social and Cultural Factors:
Such places, where the culture and social environment is congenial to absorb outsiders, present excellent opportunities for entrepreneurs from outside communities to spur growth. In other words, social environment and its adaptability is one factor which influences entrepreneurs to move to different locations.
ix. Political Environment:
Entrepreneurs prefer to carry out their business activities in places where there is greater political stability. For instance, it is now an accepted fact that entrepreneurial environment is suitable in states like Maharashtra, Tamil Nadu, Delhi, and Rajasthan among others but not in West Bengal and Bihar due to the unrest there.
The role of government is also an important influential factor. At times, governments keep announcing various incentives and concessions to promote industrial development and direct the movement of entrepreneurs to desired, distant locations.
xi. Existing Infrastructure:
Sound infrastructure facilities are a natural incentive for entrepreneurial development. Any well-connected place with good communication facilities proves to be a rallying point for entrepreneurs to set shop there.
Entrepreneur – Opportunities Available: Network Marketing, Franchising, BPO, E – Commerce and M – Commerce
The contemporary business environment is a dynamic one. There are many opportunities for people aspiring to run their own business to venture into the world of self-employment. Entrepreneurship plays a significant role in the development of socio-economic growth of any region as new businesses create employment opportunities, utilise available resources in a productive manner and increase the quality of life in the community in which they operate.
In the traditional socioeconomic scenario, only limited avenues were available for aspiring entrepreneurs desiring to start their own businesses. But with improvements in information and communication technology, newer possibilities for entrepreneurs have come up. These opportunities provide many options to individuals yearning to start their own profitable enterprises and contribute to social growth as well.
Some of these are:
Network Marketing, also known as Multi-Level Marketing (MLM) is a business model that uses direct selling and relationship referrals as a method of selling a company’s products or services. In typical networking models, individual distributors (often referred to as associates) essentially contract or act like a franchisee to the parent company and are paid a commission based on the volume of product or services that are sold as a result of their own organisation’s efforts. This business model is similar to franchising and is sometimes called micro-franchising.
The company utilises independent representatives for contacting potential customers and making sales. The company would not be able to contact so many people all by itself using traditional means of targeting customers. This is the reason why many companies are choosing this method to increase their market presence. Network marketing is very popular with the companies as much of the expenditure spent on advertising and sales promotion is saved. It offers the independent distributors to become their own boss, work according to their convenience and reap all the benefits of their efforts. E.g. Amway, Herbalife, etc.
Network marketing is a very attractive option for entrepreneurs due to the following factors:
i. Very low initial investment is needed in relation to other forms of businesses.
ii. Financial freedom as the entrepreneur chooses the amount he wants to invest as per his preferences.
iii. The cost of operating in a network marketing model is low.
iv. Lower level of risk and uncertainty as compared to other business models.
v. High earning potential for the distributor, as he gets to keep all the profits he earns.
vi. Individuals can easily work from home. It is very convenient for retired people and housewives.
vii. This kind of a business can be conducted online, so geographical restrictions do not apply. The potential market spans the whole world.
However network marketing may not be for everyone. It should be noted that only a few people are able to earn profits through this method.
Besides, there are certain other dangers associated with it:
i. Illegal activities are often masked as network marketing schemes, for e.g. pyramid schemes or Ponzi schemes.
ii. It takes a lot of efforts to make sales this way.
iii. The success rate for network marketing is very low; most people who enter network marketing are unable to make any profits.
iv. The associate may be required to buy a certain portion of the company’s products himself in order to remain in business.
Even though the concept of network marketing is often criticised, it cannot be denied that it offers entrepreneurs the chance to own their own business without much investment. The freedom to work from home and reap all rewards of one’s efforts makes this option very attractive. But people should also consider the risks & dangers associated with network marketing before getting involved.
Franchising is a business model in which many different owners share a single brand name. A parent company allows entrepreneurs to use the company’s strategies and trademarks; in exchange, the franchisee pays an initial fee and royalties based on revenues. The parent company also provides the franchisee with support, including advertising and training, as part of the franchising agreement.
There are many different types of franchises though people normally associate them with fast food restaurants like McDonald’s and KFC. An individual who purchases and runs a franchise is called a “franchisee”. The company or individual who sells a franchise is called a “franchisor”.
The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases the franchisee must pay an on-going franchise royalty fee, as well as an up-front, one-time franchise fee to the franchisor. Franchising has become one of the most popular ways of doing business in today’s marketplace.
Buying a franchise is a good way of owning one’s own business as it has many advantages including:
i. The franchisee gets to use an already recognized brand name like McDonald’s, Pizza Hut, etc., and thus his risk is minimized.
ii. He also gets support and training from the parent company.
iii. Franchise owners have better chances of success than other types of business owners since they get a proven business system.
iv. The franchisee gets technical support from the franchisor in case of technical problems.
v. Much of the Research & Development (R&D) work would be done by the parent company itself.
vi. Financing will be easier for owners of franchises with existing goodwill, as compared to owners of other forms of business.
vii. The franchisee would get exclusive rights in a particular territory as normally the franchisor won’t sell any other franchise in same territory.
Disadvantages of Franchising:
i. The franchisee does not have much freedom in running the business; he has to act according to rules of the parent company.
ii. The profits have to be shared with the franchisor.
iii. The cost of buying a franchise is usually higher than starting one’s own business as royalty fees, franchise fees, etc. have to be paid.
iv. Any damage to the reputation of the parent company will affect business of all its franchises.
Franchising as a business model has many advantages which make it a popular option for many aspiring business owners. But it should be taken note of that in spite of the merits of owning a franchise; there are also certain demerits like lack of freedom in operation and profit sharing with the franchisor. Thus anyone desiring to own a franchise should consider both sides of the situation and then take a suitable decision.
Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Companies implement BPO as a cost-saving measure for those tasks that are required but do not have any direct impact on their position in the marketplace. A business can improve its efficiency by outsourcing non-core functions to other firms as now it can invest its time and resources in increasing its core competencies. Offshore outsourcing refers to outsourcing from overseas. E.g. US companies outsourcing their work to India.
If the contract is made within the country then such outsourcing is called on shore outsourcing. E.g. a company in Mumbai outsourcing its work to a company in Bangalore. One can also make a contract with a company from a neighbouring country; this type of outsourcing is called near shore outsourcing.
E.g. Indian companies outsourcing to Nepal. India became familiar with BPOs in the 1990s when liberalisation of the Telecom Sector gave a boost to this industry. Now India is a favourite destination for global offshore outsourcing companies due to the vast amount of Foreign Direct Investment (FDI) in the country, coupled with the availability of skilled English speaking workforce.
BPO services are generally categorised into horizontal and vertical services:
a. Horizontal BPO:
Horizontal BPO involves function centric outsourcing. The vendor specializes in carrying out particular functions across different industry domains. Examples of horizontal BPO are outsourcing in procurement, payroll processing, HR, facilities management and similar functions. Automatic Data Processing (ADP) is an example of a horizontal BPO vendor. ADP focuses on providing services in horizontal functions such as payroll, HR, benefit administration, tax solutions, etc.
b. Vertical BPO:
A vertical BPO focuses on proving various functional services in a limited number of industry domains. Healthcare, financial services, manufacturing and retail are examples of vertical BPO domains. EXL Service Holdings is a vertical BPO having focus on industry domains such as healthcare, business services, utilities and energy and manufacturing.
Many companies around the world have adopted the process of outsourcing and reaping the benefits.
There are many advantages of outsourcing:
i. The company can utilise its time on improving its core competencies by outsourcing the non-core tasks.
ii. Savings on time, effort, manpower, operating costs and training costs, resulting in overall cost advantage.
iii. Provides access to professional, expert and high-quality services.
iv. Outsourcing helps to increase productivity in all areas.
v. Flexibility in choosing among various high class vendors to outsource the job.
vi. Reduction of burnout for regular employees who would have otherwise been burdened with non-core tasks.
vii. Risk sharing.
Outsourcing offers many benefits to the company, but it is not without certain risks like:
i. Threat to security and confidentiality of information.
ii. Some hidden expenses, like legal costs may have to be incurred.
iii. Loss of employment in certain sectors as many of the non-core jobs are outsourced.
iv. Risk of low quality work.
v. It is not easy to manage work that has been outsourced to a different country.
Outsourcing certain tasks to other service providers makes the work easier and allows the company to concentrate more on its core competencies. But it has certain disadvantages also like risk of low quality work and security threats. A company should weigh the pros and cons of outsourcing carefully before deciding whether to outsource some work or to accomplish it internally.
Electronic commerce or e-commerce is a term for any type of business, or commercial transaction that involves the transfer of information across the Internet. It covers a range of different types of businesses, like online ticketing, e-publishing, online education, buying and selling of goods through the internet, business to business transactions, etc.
It is one of the most important aspects of the Internet to emerge. E-commerce allows consumers to conduct business electronically with no barriers of time or distance. Electronic commerce has expanded rapidly over the past five years and is predicted to accelerate over the coming years.
There are basically five types of e-commerce:
a. Business to Consumer (B2C) – B2C stands for Business to Consumer. This refers to those transactions wherein a business sells a product or service online to a customer. Here the buyer and the seller interact directly with each other.
b. Business to Business (B2B) – B2B stands for Business to Business. It is the exchange of products and services between businesses rather than between business and customer. It forms the largest segment of E-commerce and generates more revenues than B2C model. It is similar to manufacturer issuing goods to the retailer or wholesaler.
c. Consumer to Consumer (C2C) – C2C stands for Consumer to Consumer. It helps the online dealing of goods or services among people. Programmes provided by online market dealers such as E-Bay is used to complete such transactions.
d. Peer to Peer (P2P) – This is an online model that helps people to instantly share computer file and resources without having to interact with central web server. Certain software has to be installed in all those computers which want to form the mutual platform. This is a very low income generating model.
e. M-Commerce – In this model, transactions are conducted by means of mobile phones. The customers interact through mobile devices to complete business deals and effect changes in ownership of goods and services.
Requirements for E-Commerce:
To conduct online business or e-commerce, a businessman would need the following:
a. The product or service which is to be traded online. It could be anything from books, tools, flowers, etc. to services like banking or insurance.
b. A website where a detailed description of the products or services, along with price and terms of sale are given. The website should be easy to navigate and provide maximum information to the prospective customers. Services of a web designer can be taken to build a unique website that fulfills the needs of the business.
c. Advertisement and promotional techniques to inform people about the website and products offered. The target market should be informed that now they can trade with the company through the website.
d. A method of accepting orders should be in place. This can be an online form which the customers can conveniently fill out and submit for placing an order.
e. There has to be a secure method for accepting payment from the customers. The businessman can choose merchant account handling and shopping cart system to integrate the payment procedure into his website. On the other hand, he can select a third party like PayPal or ClickBank to handle all the e-commerce processing. The merchant should have Secure Socket Layer (SSL) capability to accept credit card payments.
f. Another requirement is of an efficient system for transporting the products to the customer. Some products like software or E-books can be transmitted through the web though shipping may be required for transporting products in international e-commerce.
g. There should a system to provide after sales services to the customers and handle their grievances. This can be done through email, feedback forms, complaint forms, etc.
How E-Commerce is conducted?
a. The customer visits the website of a company and places order. He can call, SMS or order through the online form provided in the website. The order is secured through SSL capability.
b. Authorisation of the transaction places place before any funds are transmitted. The payment processing system handles the secure online payment or credit card information in real time.
c. Merchant account provider processes the funds – the payment amount is debited from the customer’s bank or credit card account and deposited into the trader’s bank account.
d. The company fulfills the customer’s order for the product or service by delivering the goods to him. Many firms also give the option of returning the goods in case the customer is not satisfied.
Benefits of E-Commerce:
i. Business can be conducted 24 x 7.
ii. No geographical barriers.
iii. Provide customer more information about the business on the website.
iv. Cheapest form of doing business.
v. More customer base.
vi. Increase product awareness.
vii. Helps to build customer loyalty.
viii. Best for targeting niche market.
ix. Potential to increase overall business base.
x. Quick comparison shopping.
i. Security threats.
ii. Absence of standard security and communication protocols.
iii. Insufficient telecommunication bandwidth.
iv. E-commerce technology is not yet fully developed.
v. Increased cases of fraud.
vi. Lack of trust in online transactions.
vii. Not all products can be traded online.
E-commerce is a fast growing field in spite of all its shortcomings. Further improvements in information and web technology will ensure creation of proper protocols and security systems for more innovation and growth in this field. This format of conducting business has immense potential for innovation and rapid development in the coming future.
Mobile Commerce (M-commerce) is the buying and selling of goods and services through wireless handheld devices such as cellular/mobile telephone and personal digital assistants (PDAs). It is also called next-generation e-commerce as it makes it possible for users to access the internet without having to plug in. The Wireless Application Protocol (WAP), which is the driving force behind m-commerce, is more developed in Europe, where mobile devices equipped with Web-ready micro-browsers are much more common than in the United States.
This concept though still in its infancy is beginning to gain in popularity. The growing usage of mobile phones throughout the world, especially in developing countries increases the future scope of this industry. The availability of services like high speed internet access, SMS, MMS, multimedia, WAP, Bluetooth, etc. on mobile phones, coupled with the convenience of user-friendly and light weight hand held devices make it an increasingly preferred medium of conducting business.
An M-Commerce application can be B2B, B2C or any other of the classifications available with e-commerce world. Companies like Nokia, Motorola, and Erickson are working together with the wireless providers to develop the WAP enabled mobile phones and handheld devices. People having high speed internet connectivity on their mobile phones can easily shop, sell, pay bills or trade online anytime and from anywhere in the world.
M-Commerce is being used by many companies to provide better services to customers. E.g. State Bank of India offers the options of both online banking and mobile banking services to its customers. Use of SMS for promotional and advertising activities is also widespread among businesses.
Advantages of M-Commerce:
i. The user can access m-commerce anytime and from anywhere they want.
ii. Some mobile phones offer high level of security for online transactions.
iii. Mobile phones are convenient to use because of light weight and small size.
iv. The user can personalize his settings on his device according to his needs.
Disadvantages of M-Commerce:
i. The small screen of the mobile phones limits types of file and data transfers.
ii. The use of graphics is limited on mobile phones as compared to Laptops or personal computers.
iii. Limited bandwidth.
iv. Most mobile phones have weak processors and limited memory.
v. Spam on mobile phones can affect the working of the device.
vi. Risk of identity theft.
vii. Security concerns exist even though certain devices provide high level of security.
viii. Lack of high speed internet connectivity in many parts of the world.
ix. Effective technology for smoothly conducting m- commerce in different fields is still under development.
x. Technological problems.
xi. People’s lack of trust in wireless transactions.
M-commerce is still a developing field albeit a very fast growing one. The ease of use and convenience offered by m- commerce make it more promising than traditional e-commerce.
Wireless applications are developing rapidly opening up newer avenues for companies, advertisers and entrepreneurs. It might take some years for m-commerce to become a globally accepted medium of business, but from the kind of popularity it has gained over the past few years, it can be said that the foundation has already been laid.
Entrepreneur – Difference between Labour and Entrepreneur
Labour is human physical and mental effort directed in a production process and the reward for it is wage or salary.
Entrepreneur is a self-driven factor employing all aspects of making a given product. Profit is a reward for that endeavor.
Difference # Labour:
1. Nature of work- Has to do only a few fixed activities.
2. Nature of risk-Is not involved in risk taking. Receive fixed wages in return of his labour.
3. Availability of income -Get his wages for labour, irrespective of the sales of the product.
4. Mobility -Is more mobile. Can change his work or place easily.
5. Responsibility-Does not feel the responsibility of the end product.
Difference # Entrepreneur:
1. Nature of work- Performs all jobs right from the selection of business to selling a product.
2. Nature of risk- Has to bear many risks with no certainty of profit.
3. Availability of income – Gets profit only at the end of the sale of the product.
4. Mobility – Has limited mobility as the responsibility of the organization depends upon him.
5. Responsibility- Feel the responsibility of the end product.
Entrepreneur – Difference between Profit Oriented Entrepreneur and Social Entrepreneur
Entrepreneurs with a Profit Motive:
i. Highly motivated by a desire to build a venture that brings them name, fame and money.
ii. Risk bearers.
iii. Create monetary value.
iv. Pool together resources and people to exploit market gaps/opportunities.
v. Mainly focused on making profits—in the short run as well as long run.
vi. Business entrepreneurs typically measure performance in terms of profit and return.
Entrepreneurs with a Social Motto:
i. Highly motivated by the desire to bring about social change (without seeking immediate, money tangible, measurable monetary gains).
ii. Emotionally charged individuals who are unmindful of the risks and challenges on the way. They are committed to a cause.
iii. Make a difference from the point of view of society. They seek to create a social value.
iv. Change agents, social value creators or the leaders of an opinion that is socially relevant and important.
v. Mainly focused on improving the lot of society in the long run. They are long-distance runners.
vi. Social entrepreneurs work for improving the lot of those ignored, less fortunate sections of society—mostly living below the poverty line.
Entrepreneur – Entrepreneurial Process vs. Technopreneurial Process
1. Opportunity Analysis is the first step
2. Next step is Business planning
3. After business planning next logical step is Gathering Resources
4. Once resources are gathered, the decision Implementation takes place
5. Scaling and Harvesting are done as next process
6. Commercialization is next important aspect of entrepreneurship process
7. Monitoring and Evaluation is the last step in this process
1. Idea Generation is the first step
2. Next step involves Idea Screening
3. Once ideas have been screened, then Concept Testing begins
4. After the concept testing is positive, Business Analysis is carried out
5. Prototyping is next step in technopreneurship
6. Whereas in case of technopreneurship, everything starts on idea
7. Whereas, in case of technopreneurship, everything starts on an opportunity
(i) There are more similarities than differences between the two concepts. Entrepreneurship & technopreneurship, follow the path involving, Identify needs, Build products, Mitigate risks, and Take the products to market.
(ii) Technopreneurship is a subset of entrepreneurship. All technopreneurs are entrepreneurs, but not all entrepreneurs are technopreneurs.
(iii) When it comes to bringing a product to market, technopreneurs often need people on their team with far broader business skill sets whereas, the entrepreneur may not require them.
(iv) Technopreneurship has greater potential for success as compared to entrepreneurship.
(v) Technopreneurs are entrepreneurs with a different set of tools and greater potential for success.
Entrepreneur – Measures and Initiatives of the State to Promote Entrepreneurship
The Initiatives and Policies for Promotion of Entrepreneurship:
The government of India and the state governments have realized the importance of entrepreneurship development. They have been taking serious measures to promote entrepreneurship.
Now we shall discuss few measures and initiatives of the state to promote entrepreneurship:
(I) Ministry of Skill Development and Entrepreneurship:
Ministry for Skill Development and Entrepreneurship (earlier Department of Skill Development and Entrepreneurship notified in July 2014) was set up in November 2014 to enforce Skill India agenda. The ministry entrusted to develop the skill of the workforce of the country. The Ministry will focuses on skilling the workforce of India and guide the entrepreneurship movement in the country.
Two institutes have been transferred to the Ministry:
1. Indian Institute of Entrepreneurship (IIE)
2. National Institute of Entrepreneurship and Small Business Development (NIESBUD)
(II) National Policy for Skill Development and Entrepreneurship 2015:
The National Policy on Skill Development and Entrepreneurship, 2015 has been enacted with a vision to build an ecosystem of empowerment by skilling on a large scale at speed with high standards. It aims at promoting a culture of innovation based entrepreneurship. The policy further has the vision to ensure sustainable livelihoods for everybody by generating wealth and employment through entrepreneurship.
We present here the objectives of the National Policy on Skill Development and Entrepreneurship, 2015 as given in the original policy document, page no 11 – 13, published by Ministry of Skill Development and Entrepreneurship, New Delhi.
“The basic objective of the Policy is to empower the individual, by enabling her/him to realize their full potential through a process of lifelong learning where competencies are accumulated via instruments such as credible certifications, credit accumulation and transfer, etc. As individuals grow, the society and nation also benefit from their productivity and growth.
This will involve:
a. Make quality vocational training aspirational for both youth and employers whereby youth sees it as a matter of choice and employer acknowledges the productivity linked to skilled workforce by paying the requisite premium.
b. Ensure both vertical and horizontal pathways to skilled workforce for further growth by providing seamless integration of skill training with formal education.
c. Focus on an outcome-based approach towards quality skilling that on one hand results in increased employability and better livelihoods for individuals, and on the other hand translates into improved productivity across primary, secondary and tertiary sectors.
d. Increase the capacity and quality of training infrastructure and trainers to ensure equitable and easy access to every citizen.
e. Address human resource needs by aligning supply of skilled workers with sectoral requirements of industry and the country’s strategic priorities including flagship programmes like Make in India.
f. Establish an IT based information system for aggregating demand and supply of skilled workforce which can help in matching and connecting supply with demand.
g. Promote national standards in the skilling space through active involvement of employers in setting occupational standards, helping develop curriculum, providing apprenticeship opportunities, participating in assessments, and providing gainful employment to skilled workforce with adequate compensation.
h. Operationalize a well-defined quality assurance framework aligned with global standards to facilitate mobility of labour.
i. Leverage modern technology to ensure scale, access and outreach, in addition to ease of delivering content and monitoring results.
j. Recognize the value of on-the-job training, by making apprenticeships in actual work environments an integral part of all skill development efforts.
k. Ensure that the skilling needs of the socially and geographically disadvantaged and marginalized groups (like the SCs, STs, OBCs, minorities, differently abled persons etc.) are appropriately taken care of.
l. Promote increased participation of women in the workforce through appropriate skilling and gender mainstreaming of training.
m. Promote commitment and ownership of all stakeholders towards skill development and create an effective coordination mechanism.
The core objective of the entrepreneurship framework is to coordinate and strengthen factors essential for growth of entrepreneurship across the country.
This would include:
a. Promote entrepreneurship culture and make it aspirational
b. Encourage entrepreneurship as a viable career option through advocacy.
c. Enhance support for potential entrepreneurs through mentorship and networks.
d. Integrate entrepreneurship education in the formal education system.
e. Foster innovation-driven and social entrepreneurship to address the needs of the population at the bottom of the pyramid.
f. Ensure ease of doing business by reducing entry and exit barriers.
g. Facilitate access to finance through credit and market linkages.
h. Promote entrepreneurship amongst women.
i. Broaden the base of entrepreneurial supply by meeting specific needs of both socially and geographically disadvantaged sections of the society including SCs, STs, OBCs, minorities, differently-abled persons.
(III) National Skill Development Mission:
The National Skill Development Mission was officially launched on 15 July 2015 on the occasion of World Youth Skills Day. The Mission has been developed with the aim to construct convergence across different sectors and states in the matters related to skill training activities.
The Mission would also assist in expediting the decision making across sectors so as to achieve skilling at scale with speed and standards. The Mission would be executed by Ministry of Skill Development and Entrepreneurship (MSDE).
The institutional mechanism of the Mission includes a Governing Council for policy guidance at apex level, a Steering Committee and a Mission Directorate (along with an Executive Committee). Mission Directorate will be supported by three other institutions: National Skill Development Agency (NSDA), National Skill Development Corporation (NSDC), and Directorate General of Training (DGT).
(IV) Pradhan Mantri Kaushal Vikas Yojana (PMKVY):
Under the Ministry of Skill Development & Entrepreneurship, Pradhan Mantri Kaushal Vikas Yojana is the flagship outcome-based skill training scheme .This is a certification and reward scheme. The basic aim of the scheme is to enable and mobilize a large number of Indian youth to undertake outcome based skill training. This would make the youths employable.
Under the scheme, monetary reward would be provided to trainees who are successfully trained, assessed and certified in skill courses run by affiliated training providers.
(V) Startup India:
The Prime Minister of India, Shri Narendra Modi had initiated the “Start-up India” initiative. This initiative aims at fostering entrepreneurship and promoting innovation by creating an ecosystem that is conducive for growth of Start-ups.
The objective is that India must become a nation of job creators instead of being a nation of job seekers.
The Government of India has announced ‘Startup India’ initiative for creating a conducive environment for startups in India.
An entity shall be considered as a ‘startup’ –
(a) Up to five years from the date of its incorporation/registration,
(b) If its turnover for any of the financial years has not exceeded Rupees 25 crore, and
(c) It is working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property;
Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘startup’;
In order to obtain tax benefits a startup so identified under the above definition shall be required to obtain a certificate of an eligible business from the Inter- Ministerial Board of Certification consisting of:
(a) Joint Secretary, Department of Industrial Policy and Promotion,
(b) Representative of Department of Science and Technology, and
(c) Representative of Department of Biotechnology.
The scheme for Start-ups Intellectual Property Protection (SIPP) is envisaged to facilitate protection of patents, trademarks and designs of innovative and interested Start-Ups. The SIPP is basically aimed at promoting awareness and adoption of intellectual property rights among Start-ups.
(VI) Micro Units Development and Refinance Agency Bank (MUDRA Bank):
The Government of India has set up this new institution to develop micro units and refinance of MFIs to encourage entrepreneurship in India and provide the funding to the non-corporate small business sector.
Under the Pradhan Mantri MUDRA Scheme, MUDRA Bank has launched three initiative products viz., Shishu loan scheme, Kishor loan scheme, and Tarun loan scheme. The stage of growth is identified and the micro units or entrepreneur are funded according to the requirement.
MUDRA Bank would be refinancing through state level institutions, MUDRA will deliver the loan through NBFCs, MFIs, rural banks, district banks, nationalized Banks, private banks, primary lending institutions and other intermediaries.
(VII) Stand-Up India Scheme:
This scheme provides bank loans between Rs. 10 lakh and 1 Crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise. This enterprise may be in manufacturing, services or the trading sector.
In case of non-individual enterprises at least 51% of the shareholding and controlling stake should be held by either a Scheduled Caste (SC) or Scheduled Tribe (ST) or woman entrepreneur. Stand-up India scheme would be operated by all the branches of scheduled commercial banks in India.
(VIII) Other Initiatives and Measures:
There are many measures and policies directed to promote entrepreneurship in India.
(a) Prime Minister Employment Generation Programme (PMEGP):
At the national level, Khadi and Village Industries Commission (KVIC), is the nodal agency to implement this programme. At the state level, the Scheme is implemented through State KVIC directorates, State Khadi and Village Industries Boards (KVIBs) and District Industries Centre (DICs) and banks. The subsidies provided by the government under this scheme are routed by KVIC through the identified banks to the beneficiaries or entrepreneurs in their respective bank accounts.
(b) Entrepreneurship Development Programmes (EDPs):
Across the states m India, Entrepreneurship Development Programmes are being regularly organized to nurture and cultivate the talent of aspiring youth towards entrepreneurship. Through these EDPs the youth are made aware of the various aspects of industrial activity required for setting up MSEs.
These EDPs are generally conducted in ITIs, Polytechnics and other technical institutions, where skill is available to motivate them towards self-employment.
(c) National Science & Technology Entrepreneurship Development Board:
The National Science & Technology Entrepreneurship Development Board (NSTEDB), established in 1982 by the Government of India under the aegis of Department of Science & Technology.
The main objectives of NSTEDB are:
(i) To promote and develop high-end entrepreneurship for S&T manpower .Besides generating self-employment by utilizing S&T infrastructure and by using S&T methods.
(ii) To assist and undertake informational services for promoting entrepreneurship.
(iii) To develop a synergy among the academic institutions, the agencies of the support system, and Research & Development (R&D) organisations with the aim to promote entrepreneurship and self-employment utilizing S&T . The backward areas to be given special attention.
(d) The National Institute for Entrepreneurship and Small Business Development:
NIESBUD is an organisation under the Ministry of Skill Development and Entrepreneurship. In order to promote entrepreneurship, the organisation provides training, consultancy, research, etc. It conducts training of trainers, management development programmes (MDPs), Entrepreneurship-cum-skill development programmes; entrepreneurship developments programmes (EDPs) and cluster intervention.
The objectives of the institute are:
(i) The institute has been trying to provide standardized materials, training and support for existing and potential entrepreneurs.
(ii) To affiliate and help other organisations in training and entrepreneurship development related activities.
(iii) To be a apex resource institute at the national level in order to accelerate the process of entrepreneurship development countrywide and among all sections of the society.
(iv) To organize research and documentation activities relevant to entrepreneurship development.
(v) To provide training to trainers, promoters and consultants in various areas of entrepreneurship development.
(vi) To provide consultancy at both national and international levels in order to promote entrepreneurship and small business development.
(vii) To provide forums both at both national and international levels for interaction and exchange of experiences helpful for policy formulation and modification at various levels.
(viii) To make local entrepreneurs and aspirants aware of the international experience and expertise in entrepreneurship development.
(e) lndian Institute of Entrepreneurship (IIE):
Under the Ministry of Skill Development & Entrepreneurship, Indian Institute of Entrepreneurship has been set up as an autonomous organization. IIE aims at providing training, research and consultancy services in Small and Micro Enterprises (SME), with special emphasis on entrepreneurship development.
(IX) Initiatives for Promotion of Rural Entrepreneurs:
The central government and the state governments have been relentlessly trying to promote entrepreneurship in rural areas.
In this article we mention a few viz.:
(i) Training of Rural Youth for Self-Employment (TRYSEM)
(ii) Swarnjayanti Gram Swarozgar Yojana (SGSY)
(iii) Council for Advancement of People’s Action and Rural Technology (CAPART)
(iv) Mahatma Gandhi National Rural Employment Guarantee Act-2005
(v) Provision of Urban Amenities in Rural Areas (PURA)
(vi) Aajeevika – National Rural Livelihoods Mission (NRLM)
The other institutional support for rural entrepreneurship includes:
A. National Bank for Agriculture and Rural Development (NABARD):
NABARD established in 1982 promotes not only agriculture but also supports small industries, cottage and village industries, and rural artisans using credit and non-credit approaches. Besides, it also offers counseling and consultancy services and organizes various training and development programmes for rural entrepreneurs.
B. The Rural Small Business Development Centre (RSBDC):
It is the first of its kind established by the world association for small and medium enterprises which is sponsored by NABARD. It provides assistance to the socially and economically disadvantaged individuals and groups. It aims at providing management and technical support to current and prospective micro and small entrepreneurs in rural areas.
Since its establishment, RSBDC organizes several programmes on rural entrepreneurship, skill up gradation workshops, mobile clinics and trainers training programmes, awareness and counseling camps in various villages. Through these programmes it covers a large number of rural unemployed youth and women in several trades, which includes food processing, soft toys making, ready-made garments, candle making, incense stick making, two-wheeler repairing and servicing, vermicomposting, and non-conventional building materials.
C. Small Industries Development Bank of India (SIDBI):
Set up as an apex bank to provide direct/indirect financial assistance under different schemes, to meet credit needs of small entrepreneurs or business organizations.
(X) Other Institutional Support for Women Entrepreneurs:
The schemes associated with the promotion of women entrepreneurs include Mahila udyam nidhi , Mahila vikash nidhi , Micro credit scheme by SIDBI (Small Industries Development Bank of India), Dena shakti scheme of Dena BanK, Udyoglni scheme of Punjab & Sind bank etc.
i. SBI and NABARD have been involved in development and financing of enterprises set up by women entrepreneurs.
ii. Some of the other organizations engaged in providing technical, financial and marketing assistance to women entrepreneurs include SI DO (Small Industries Development Organization), CWEI (consortium of women entrepreneurs of India), WIT (Women India Trust) , SEWA (Self Employed Women Association), FIWE (Federation of India Women Entrepreneurs) , Central Social Welfare Board (CSWB), National alliance of young entrepreneurs (NAYE)
iii. Schemes of Ministry of MSME-
(a) Trade related entrepreneurship assistance and development (TREAD) scheme for women
(b) Mahila Coir Yojana
Mahila Vikas Nidhi:
SIDBI had developed this fund for the entrepreneurial development of women especially in rural areas. Under Mahila Vikas Nidhi grants loan to women are given to start their venture in the field like spinning, weaving, knitting, embroidery products, block printing, handlooms handicrafts, bamboo products etc.
Rural and Women Entrepreneurship Development (RWED):
The Rural and Women Entrepreneurship Development programme aims at promoting a suitable business environment and at to encourage and support the entrepreneurial initiatives of rural people and specially women.
Entrepreneurship Development Initiatives in Assam:
The Central government and the state governments of India had recognized the need for promotion and development of entrepreneurship among the youth and aspiring young entrepreneurs. The state of Gujarat was the maiden state to undertake systematic endeavours in entrepreneurship development.
As far as Assam is concerned, in 1973 Entrepreneurial Motivational Training Centers (EMTC) were set up at the district level in order to recognize, select, and provide training to the prospective candidates who were aspiring to be entrepreneurs. Later they were merged with District Industries Centres.
Presently, Assam has many agencies that promotes entrepreneurship in the state and the north east region viz.,
1. Small Industries Services Institutes (SISIs) and its branches
2. North Eastern Industrial and Technical) Consultancy Organisation (NEJTCO),.
3. Indian Institute of Entrepreneurship (HE)
4. North Eastern Industrial Consultant (NECON)
Besides, District Industries Centers (DICs), Small Industries Development Corporations, National Productivity Council (NPC), small industries associations and non-governmental organizations provide training for the beneficiaries under Prime Minister’s Rozgar Yojana (PMRY). NABARD promotes rural and women entrepreneurship, Council for Advancement of People’s Action and Rural Technologies (CAPART) under the Union Ministry of Rural Development, helps voluntary organizations in entrepreneurship development effort.
The department of Science and Technology promotes entrepreneurs in the field of science and technology.
Entrepreneur – Major Sources of Finance: Sweat Equity, Personal Financing, Personal Credit Lines, Friends and Family and a Few Others
For decades, entrepreneurs have followed a traditional stair-step of financing methods to vault their companies through successive stages of growth. Starting with personal savings, they would often then raise seed money from personal contacts, move on to banks, angel investors and/or venture capitalists. Eventually, a successful startup would offer shares to investors and become a publicly traded company.
But openings on to that well-trodden paths are narrowing. Banks and venture firms are less liberal with funds since the financial crisis of 2008. Initial public offerings of shares are also harder to float.
However, new fund raising mechanisms have been springing up. The new culture of social media has produced hybrid online platforms with elements of contributing, investing and marketing. Through Kickstarter and Indiegogo, business innovators rely on the kindness of web strangers to back their projects. While supporters celebrate the new opportunities, some experts see dangers of investor fraud, as well as possible pitfalls for unwary startups.
However, major sources of new venture or startups are as follows:
Source # 1. Sweat Equity:
Entrepreneurs can “fund” the first stage of their business by using their own unpaid labour and resources to create value. Rather than contributing cash, they might write code for a new system or build a workshop in their garage. By investing own resources without outside funding, entrepreneurs are required to develop an idea on his own time.
He should control the decisions and any intellectual property he creates. If entrepreneurs have partners efforts are made to provide full credit for their contributions. There is need to have a “deal memo” on the ownership percentage for each partner. A truly original idea conceived in an instant can be worth hours of computer programming.
It is better to maintain accounting books. Unequal financial contributions or sweat equity among the partners may change their views on the ownership shares they deserve. There must be a clear agreement and it will avoid lawsuits years later if the enterprise takes off.
Source # 2. Personal Financing:
Personal saving of an entrepreneur is generally a seed money for the small business. The initial funding for a fledgling private business has often come from its founders. A budding entrepreneur might draw on a personal savings account to finance an indie film. It may not be very creative, but it amazed at the number of “wannabe” entrepreneurs who haven’t thought about saving any money before they start, or wouldn’t think of using their own savings to start a business.
No investor will put money into a deal if they see that potential entrepreneur have no “skin in the game.” The entrepreneur can retain control of their project. They are also proving to future funders that they’re willing to put their own money at risk to launch their business.
Source # 3. Personal Credit Lines:
Entrepreneur may qualify for a secured personal credit line based on his personal credit efforts. A credit card can be used to pay for the machine tools needed to build a sample product or prototype. Credit cards can usually be acquired with even less history. It is well known fact that start-ups have been built on one or both of these.
The advantage is that entrepreneur retain total ownership and control, as long as he make minimum payments.
Source # 4. Friends and Family:
These are people who should believe in the entrepreneur, without waiting to see if his idea works, or waiting until he have real customers, revenue, and hard assets. These commitments should always be positioned in writing as promissory notes, or so-called bridge-loans, which convert to equity at a rate determined by later investors.
When a young enterprise produces promising early results, the founders’ friends and family have often been the first outsiders who chip in money to help it grow. The entrepreneurs’ parents may give them a loan, or their college friends may buy small ownership stakes. Friends and family often help because they want to support the entrepreneurs, not for an expected profit.
Source # 5. Bank Loans:
Banks and credit unions make loans to small businesses that need cash to fund their next growth spurt. If the small company is already profitable, lenders may advance the cash for business expansions, such as new store locations, that will increase profits.
Entrepreneurs may qualify for loan guarantees or lower interest rates through programs of the small business chamber of commerce or local economic development agencies. The bank takes no ownership share of the company promoted by the entrepreneurs. Banks see small business loans as risky investments.
To get a loan on favorable terms, entrepreneurs need a solid business plan, extensive documentation of entrepreneurs creditworthiness and possibly assets to post as collateral. To help entrepreneurs navigate the loan process, web- based outfits such as Multifunding(dot)com is now offering to connect entrepreneurs with lenders, guide entrepreneurs, choice among banks or facilitate loan applications of the entrepreneurs.
Source # 6. Peer-to-Peer Lending:
This is a process whereby a group of people comes together to lend money to each other. It’s been around many years, in examples like small business groups or ethnic groups supporting similar efforts. In the start-up context, look for a successful entrepreneur peer willing to fund similar new ideas.
Source # 7. Microloans:
There are many private companies and non-profits organisations that offer small loans, up to 2 crores, to promote entrepreneurship, to individuals who would not normally quality for bank financing. For example, SKS Finance Ltd.
Source # 8. Vendor Financing:
If entrepreneurs need tangible products for inventory, many manufacturers and distributors can be convinced to defer their payment until the goods are sold by them. This really means an extension of the normal 30-day payment terms to a period of months or longer, depending on their credit worthiness and extra fees.
Source # 9. Purchase Order Financing:
The most common scaling problem faced by startups is the inability to accept a large new order, since they don’t have the cash to build and deliver the product. (Purchase Order) financing companies will often advance the required funds directly to the supplier, allowing the transaction to complete and profit to flow to the start-up.
Source # 10. Factoring Accounts Receivables:
This is similar in concept to PO financing, but applies the advance to unpaid amounts not yet due or collected from customers. In high volume start-ups starting to scale up, this will provide cash on entrepreneur’s sales immediately, rather than waiting for 30 to 60 days or longer for payment.
Source # 11. Investment Retirement Accounts (IRA) Financing:
Investment Retirement Account funds are arguably the single most accessible alternative funding source available today for start-ups. It is the amount that has already withdrawn from a viable venture to be used again for some other start-ups destination. Entrepreneur cannot use his own self-directed funds for his start-up, but many others are willing and able to loan you money from theirs, for the right terms, if they believe in the entrepreneur and his cause.
Source # 12. Angel Investors:
An Angel investor or angel (also known as a business angel or informal investor or angel funder) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.
A small but increasing number of angel investors organise themselves into angel groups or angel networks to share research and pool their investment capital, as well as to provide advice to their portfolio companies. Angel investors are often experienced entrepreneurs, who can become valuable advisers to a young company.
Wealthy individuals called angel investors like to make financial bets on early stage private companies that are capable of rapid growth, but that are still too small to seek millions from venture capital firms. Angels, often take an ownership stake in exchange for their private investment of personal funds. Such sales of company shares are called “private placements.”
Source # 13. Crowdfunding:
Entrepreneurs generally use the power of the internet to find a crowd of like-minded people, with small amounts each, to back their efforts. This approach is now spreading beyond non-profits, pre-sales and memento rewards, to soon include the ability to make small equity investments. Innovative businesses can now use social media sites such as Kickstarter and Indiegogo to appeal for financial support through “crowdfunding” campaigns.
Entrepreneurs attract backers by posting their imaginative plans and often, by promising perks to those who pitch in some money. Those perks range from product samples to an invitation to join a company-sponsored activity. This new form of crowdfunding authorised by the government will allow private sales of company shares through social media sites and other intermediaries.
Companies could raise as much as 10 crore a year through small private investments from an unlimited number of people. Crowdfunding websites are expected to crop up the fund raised programmes for the companies. These fundraising platforms are expected to emerge after the government formulates necessary regulations for small companies.
The regulatory requirements, such as financial disclosures, would be less stringent than general SEBI rules for registering securities or for making an initial public offering of shares. But the most important limiting factor in this funding arrangement is that many new shareholders have rights under the regulatory laws.
Complying with those rights could soak up company’s time and money. A start-up’s crowdfunding investors may also look like a cumbersome burden to some venture capital firms you’d counted on for the next round of financing of the company.
Source # 14. Revenues:
The least dilutive way to finance a company is with profits. It is the most popular source of financing a new venture though it is quite slow and time taking. Before raising capital, entrepreneurs are also required to control costs and increase revenues. If income statement of the companies cannot provide any more help, then it would be better to take a look at the balance sheet.
There is hidden cash in old receivables—and if they’re old because of unhappy customers, the company will need to resolve those problems before prospective investors begin their calls.
Source # 15. Venture Capital:
This is a popular vehicle for leveraging an initial venture investment. Many of these firms can provide a flexible array of services also that allow the small entrepreneurs to devote their more expensive capital to people rather than computers and cubicles. Venture capitalists also like this vehicle because it helps improve their return on investment as well.
Price is by no means the most important factor in choosing a venture debt firm. Ask for reference CEOs of difficult accounts to learn how the lender reacts in tough times. Venture capital firms, can devote several crores to the growth of a young company that has established its potential to market valuable new technology, goods or services.
Venture firms invest pools of money, raised from wealthy individuals, in enterprises with potentially high rates of return. Venture firms bring management expertise and guidance in realising the full financial payoff for investments in fast growing companies. In exchange for risking their capital, venture firms seek a substantial ownership stake and often, seats on the funded company’s board of directors.
Source # 16. Corporate Partners:
Corporate investors represent a double-edged sword to small companies. They can bring great resources to bear. They can also impose ponderous decision-making processes on fragile start-up companies. Venture capitalists only have one agenda in their investing, the maximisation of stock value.
That happens to be the same agenda as the company’s founders. Corporate investors usually have a more complex and less compatible agenda in mind such as a pipeline of technology or products, or access to key people. The people making the initial investment frequently change jobs and the relationship with the company can fall hostage to corporate politics.
Source # 17. Mergers and Acquisitions:
An entrepreneur’s tiny private company may reach its next stage of growth by becoming part of a large corporation that offers to buy it. Big companies often acquire creative enterprises whose new product or service dovetails with their own business activities. Original promoter partners and investors can get a cash payout for betting on a winning idea and bringing it to life.
After this “exit” from their investment, they can use their financial gains to start another company, or to rest from your labours. Companies may forfeit even greater financial rewards that might have been reaped from retaining control of your company and offering ownership shares to the investing public in an IPO.
And if the acquiring corporation doesn’t ask promoter of merging company by the merging company to stay on, other people will explore the full potential of the business you nurtured.
Source # 18. Initial Public Offering:
A privately owned company can raise a substantial amount of fresh capital for further growth by offering shares to the general public in an initial public offering. The private enterprise becomes a publicly traded company whose shares can be bought and sold on the NSE and BSE. After the IPO, the pre-existing ownership stakes of the company founders and early investors have a specific value determined by the stock’s daily trading price.
Small company can fund new growth opportunities through IPO. The company and other shareholders may benefit if share prices rise with profits. But also, founders and early investors, such as venture firms, have opportunities to cash out, or “exit” from the investment by selling their shares on a stock exchange.
The value of company shares may fall well below their initial offering price depending on the ongoing performance of the business and economic conditions Registration as a publicly traded company brings new requirements for frequent public disclosures of financial reports, and compliance with oilier SEBI rules.
‘However, there may be certain relations from the regulatory requirements for up to five years for “emerging growth companies” duct, IPOs. These companies can delay compliance with certain SEBI rules, including some auditing requirements. But they must comply fully once they complete the relation time set for them.
Entrepreneur – Training
Though it is true that entrepreneurs are not made just only by training, the age of functional specialization requires every enterpriser to learn various aspects of entrepreneurship from time to time. In fact, entrepreneurship itself is a continuous process of learning through training. Much of what enterpriser learns is of course from trial and error and also from the exposure that he gets while inter-acting with concerned people around.
Entrepreneurs of the 19th and 20th Century had to learn on their own without getting any formal specialized training. However, with the evolution of organized principles of professional management and advanced techniques of marketing management and Financial Management in particular, enterprisers have found it necessary to go through the organized training programmes, whenever possible.
At least those, who have no background of family business and those who would like to have a specialized knowledge of entrepreneurship find it necessary to get not only formal business training, but also counselling and guidance from experts from time to time. It is not again that such people require training only at entry point. Enterprisers find it necessary to adopt new concepts and techniques, which are developed in the light of changing socio-political environment.
This training is not confined fined only to some narrow considerations of running a business. Entrepreneurs realize that they can develop business only when they have at least a nodding acquaintance of total economic and social environment in the country. With the pace of new economic reforms in our country, there is bound to be a quantum jump in our business environment. Then again India is fortunate in having a considerable break-through in technology and science.
This necessitates up-to-date knowledge of modern methods of production. Thus, there is a vast scope for learning everything that is connected with business responsibilities. The first generation entrepreneurs of 19th Century had no such facilities of learning through organized methods. However the 3rd generation of such old entrepreneurs was asked to go through various formal training programmes.
There are many such incidences, where the grandson of the first generation entrepreneur was purposefully sent for entrepreneurial management programme either in India or abroad. Such training programmes help the entrepreneurs to identify their potential talent and it is then that they can become innovative with self-confidence.
Even the Government has now realized that training programmes at all levels for those working in responsible positions, are necessary. There cannot be one standard training programme for everyone. Even in entrepreneurship, every standardized class-room training programme will not always be necessarily useful.
Each entrepreneur may require a different type of orientation and development and yet all the entrepreneurs irrespective of their fields of activity may require some common training programme and it is here that universities, colleges, other educational institutions and entrepreneurial development institutions like MITCON in Maharashtra are in the good position to offer the training to budding new entrepreneurs for inspiring them to undertake their self-development in such a way that they become tremendously confident about the entrepreneurial mission that they have undertaken.
Everyone has some hidden potential. The training programme for entrepreneurs motivates enterprisers to discover their hidden potential, to develop that potential and finally to utilise them potentially for becoming entrepreneur in flesh and blood. Such training programmes may have a broader perspective of not only motivating them but also making them educated and well-informed about their business.
We have come across different types of such orientation programmes for different types of entrepreneurs depending on their objective of training, and need to learn something new about the business. It is obvious that such training programmes must be supplemented by practical experience, which in other words, demands on the job training. Training is effective, if the entrepreneur undertakes it with a sincerity of purpose and has complete faith in those, who act as trainers.
Training may not yield immediate results. But training may provide to entrepreneurs a positive method of thinking and may give to them modem techniques of innovation and marketing. Training is an investment, when it is completely result-oriented. Normally enterpriser undertakes the training with all seriousness of purpose because his involvement is in the development of his own business.
My own personal experience is that small scale industrialists participate in the training programmes with a better honesty of purpose and conscientiously, considering their remarks and comments and their questions to the training are most relevant and pointed.
Entrepreneurs would never like to have a waste of time and money in the training, if it is irrelevant. We are fortunate to find that, in the last 20 years, a number of new educational institutions have come forward to offer specific and purposeful orientation to the entrepreneurs all the young as well as old.
The main task before the educational Institutions, those which undertake the development of Entrepreneurial Personality, is to motivate them to liberate their mind and identify the scope for the business opportunities. It is necessary to develop their minds by pointing out to them, how there is a paradigm shift in the business sector in the country. New economic policies have brought wonderful opportunities for entrepreneurship.
The economic policy has envisaged the removal or reduction of regulations, procedural barriers are also being removed, private sector is encouraged to expand, import barriers are vanishing. Exports encouraged and there is a definite shift from the economics of socialism to market socialism. The new market economy is going to offer scope for growth in entrepreneurship. It is here that the entrepreneurial mind must be liberated from the traditional thinking.
Various surveys carried out by international agencies point out that India is emerging as the second best performing market in the coming years. The entire business sector is now going to have greater freedom to expand and diversify and will have greater access to foreign trade and technology.
The entrepreneurs will have to be taught for improving the quality of production and services and also bear in mind ethical standards. We are fortunate to find that a vigorous effort is being made in India to develop entrepreneurship through various educational institutions including the universities and Government sponsored agencies.
An overview of training efforts in entrepreneurship in our country is quite inspiring and encouraging. Maharashtra Industrial and Technical Consultancy Organization (MITCON) has given a complete dossier of various academic and training Institutes, spread in our country, where entrepreneurship is brought into focus for the younger generation.
The main objective in spreading of entrepreneurship is to make efforts to reduce unemployment, particularly amongst engineers and to reduce the pressure for white collar employment as well, amongst other educated people. The Union Ministry of Industry worked out a scheme for training new graduate Engineers in such a way that it would also help them to start small scheme industrial units.
The Scheme for Employment in 1970 by Small Industries Services Institute, which was a state-level Agency, numbered about 13 at that time and 11 other institutions mainly technical institutions. It used to be a three-months programme, covering various aspects of achievement motivation, guidance for starting entrepreneurial units, acquainting participants with Government formalities and procedures for setting up small scale ventures, guidance for conducting market survey and finally, drafting a complete project report for starting a business.
The programme also covered various functional areas of management and industrial visits were organized. The post-training support was also made available to the participants for completing procedural formalities for starting their business units. This programme is still going on and when a review was taken in the year 1980, over nine thousand engineers were trained with about eighteen percent of them have set up industrial ventures in small scale sector.
A National Scheme of Training young boys and girls for self-employment, particularly in the services sector, was introduced by the Government of India in July 1979. The main objective of the scheme was to provide to the rural youth necessary business skills and latest knowledge of trade and commerce so that they become self-reliant. Those belonging to families of marginal farmers, agricultural labourers, rural artisans and those below poverty line were eligible.
The age group for training was between 18 and 35 years. This training, which is still going on, is imparted by the existing training institutes and also by Agricultural Universities. The training is given in selected trades such as automobile repairing, tailoring, electroplating, furniture making, embroidery, blacksmith, etc. The main thrust is on developing technical skills. After the training is over, an effort is made to provide financial assistance and procuring raw materials for starting small units.
It is very encouraging to find that, during a small period of 1982-85, about ten lacks of young boys and girls were trained under the scheme. The post-training survey shows that at least half of them become self-employed. In the strict sense of the word, it may not be regarded as entrepreneurship development programme. However, the programme is appreciated since it gives relief to unemployed youth and they can start mall ventures in the field of services marketing or in home industries.
This programme is known as “TRYSEM” – Training Rural Youth for Self- Employment. The training programme came under some difficulty, particularly because it was found impossible to assess the ability or aptitude of participants towards self-employment. The duration of the training programme was also so short that the training could not equip the participants with necessary skills for commercially exploiting it. The post-training support seems to be inadequate.
A similar programme was introduced by the Xavier Institute of Social Services, Ranchi, Bihar for the development of tribal entrepreneurship in 1970. A media campaign was required to attract tribals for such programmes. The training consisted of practical shop floor training and also theoretical training and a provision was made to place such trained candidates in various production units.
Effort was also made to train young tribals or villagers in normally accepted skills oriented professions such as carpentry, photography, repairing of cycles, tailoring etc. The candidates were also encouraged to conduct market survey in places where they intend to set up small business. Although the programme was not a hundred percent success, quite a large number of young tribals were benefited by these programmes.
Entrepreneur – Lifestyle Entrepreneur (With Ways)
Running Your Business:
Most lifestyle entrepreneurs start businesses that they are passionate about. Any business, even if it is in pursuit of a passion or interest, still requires all the essential elements of a successful set-up, like a plan, a service or product, funding and a market to sell the service or product.
To start a successful business, lifestyle entrepreneurs have to pay attention to following factors:
i. Choosing suitable people to work with
ii. Selecting and managing technology to keep up with competition
iii. Attaining the perfect blend of control and growth
iv. Proper administration
vi. Gaining profits.
Whether it is closed, passed on to a family member or sold, every business has an end. Lifestyle entrepreneurs need to make sure their business is profitable. By maintaining good financial records and using good business tactics, the business can generate a good income and profits.
The entrepreneurial lifestyle is one of the major factors that drive many entrepreneurs to the decision to start their own business. It usually involves long hours, especially when starting out, but a great deal of flexibility as well. Juggling work and personal life can be a daunting challenge.
A lifestyle entrepreneur is someone who goes into business for a reason other than the financial rewards of owning a business, but because of their lifestyle. What they are looking for is to work around their lifestyle. They often use their passion to build their career and simply use their passion to build a business.
A lifestyle entrepreneur doesn’t expect to make six figures a year doing what they love to do. They just want to be able to live their life doing what they love and being able to support themselves and their family as well. They find much happiness doing what they love to do. All work and no play are making too many entrepreneurs a rather dull bunch in this day and age. With their careers taking up a major part of their time, they have very little time and energy left for their friends and family and even their personal well-being.
The term “lifestyle entrepreneur” is given to anyone who starts a business not for financial gains, but for lifestyle rewards. The biggest motivation for all lifestyle entrepreneurs is an overwhelming desire for independence. They want to live their life by their own way. They have their own attitude and perception what they want to follow.
They dream of working for themselves and running a business that is in tune with their lifestyle. They select the business which suits to their lifestyle. Therefore, practically anyone with an independent bent of mind can take up lifestyle entrepreneurship.
Even within the free enterprise system there are some factors more highly prized than money, especially for lifestyle entrepreneurs who don’t measure the true worth of their small business strictly by the bottom line. For them, the fact that they are pursuing their dream and making a living doing what they love is what matters most.
These aspiring entrepreneurs made their former companies lots of money but they know that now it’s time to start their own business. With the acceptance of the home office and the advent of information technologies spurring that movement, things started to evolve and many start-ups began springing up with home bases.
These are people who truly love what they do and they don’t need to make a million dollars. It could be an IT person, a graphic designer or an artist. Key factors for a growing percentage of entrepreneurs starting their own ventures are a desire for freedom, independence and control over their lives.
Controlling Your Own Destiny:
One of the things that a true entrepreneur looks at is governing themselves and being able to do what they think is right without having to go through red tape. It comes from sitting in board rooms and having everybody sign off for each decision that’s made.
Controlling one’s business destiny is perhaps the biggest draw for lifestyle entrepreneurs who take sole credit for the success or failure of their operation.
Ways to Create Success as a Lifestyle Entrepreneur:
The success of a rewarding lifestyle is by far one of the greatest achievements you can attain. Lifestyle entrepreneurs strive to achieve such a success.
Here are some ways to become a successful entrepreneur:
i. Define Your Values:
To become a successful lifestyle entrepreneur, you must define certain values and principles and honour them in both your personal as well as business life. Successful lifestyle entrepreneurs are required to know exactly what is important for their business.
ii. Define Solid Purpose:
The entrepreneurs must have a strong purpose for their business. This purpose will give direction to your business. If you will just open the business without any purpose then it will become direction-less. You must have concrete reasons for running your business.
iii. Create a Vision:
Visualize what you will be doing three years down the line. Realistic conceptualization is one of the key factors of becoming a successful lifestyle entrepreneur. Not only will this provide a goal, but can also be useful in formulating methods of achieving it.
iv. Make a Plan of Action:
Knowledge is not enough, application is more important. Top performers will tell you that lasting success can only come through hard work. The more you work the better results you reap. Create a plan of action that is result oriented. Your plan must work within a specific period of time. Once you form the plan you know exactly what next you have to do. You have a direction and you do not waste time. You get specific system to move forward your business.
v. Hire Support:
It is advisable to hire support in areas that do not fall under your expertise. Hiring people to do your work will provide you with more freedom and time to focus on gaining profits for your business. If you will try to do everything then you may fail also. You should involve yourselves only on those areas where you think you are very good reaming should be left to the other experts. This way, your business will be your main concern and not other lesser tasks that form an intrinsic part of any business.
vi. Attend Business Conference:
They always attend every business conference. They participate in meeting, business exhibitions or seminars. They are ready to get information from every possible source. They give importance to every business information and try to use that for their business progress.
vii. Highly Interactive:
They are very interactive. They meet with so many persons in their life. They share their experience and gain others experience. They do not hesitate to communicate with others. They try to attach themselves with every person who can give benefits to their business.
viii. Generate Passive Income:
Generating a stream of passive income will build your brand name. Passive income involves referral programs, affiliate programs and pay- for-inclusion committees.
Whether you are a lifestyle entrepreneur or dream of becoming one, following these guidelines will prove useful. Lifestyle entrepreneurship eliminates the usual drawbacks that apply to traditional entrepreneurship, which will provide the motivation and scope for growth, to achieve success. Therefore, if you are ready to live a more meaningful and interesting life, becoming a lifestyle entrepreneur could be the right choice for you.
Lifestyle Entrepreneurs’ Balanced and Controlled Life:
Lifestyle entrepreneurs are people who go into business primarily for lifestyle reasons, as opposed to a desire for financial wealth. They become business owners so they can do the kind of work they want, work the hours they want, live where they want and spend time with people they like and admire.
Lifestyle entrepreneurs judge their success by how much they enjoy their work and their lives as a whole, rather than by their status or their net worth. They want to live their own life. They do not want any interference in that. They do hard work for their business simultaneously enjoy the success also. Lifestyle entrepreneurs love it and delight in helping others find their own path to an entrepreneurial life that works for them.
There are so many people that work their jobs in a career that they chose for all the wrong reasons and the main reason is to have money to pay for their house and the bills. But it’s unhealthy for so many reasons. You hardly have any time to play all you do is work and the little time that you do have you just don’t have the energy to do anything.
By becoming a lifestyle entrepreneur you can have the best of both worlds and live your life as you have always wanted to. So how do you begin? First thing you should do is that anyone can become a lifestyle entrepreneur, all it takes is some hard work and dedication, so if you have that then you have all that you need. They are the ones who not only enjoy their life but also run their business with full focused mind.
First you need to figure out what your ability is. If you also want to be the lifestyle entrepreneurs then you ask to yourselves basically what you are good at. What do you love doing, your passion is most likely going to make you money and offer you a great business. Try to find out your passion. Try to know in which topic or business you have interest.
Now collect information about that. Know everything about that and start your business and you will see that now you are enjoying your life according to you. You are living your dream you are doing your interest business. You enjoy the life.
You will have the ability to spend more time at home with your family and there will be no more waking up so early in the morning. It is ridiculous to assume that you can’t make money online, because there are so many people doing it and they are successful at it. There is one important thing that you will need to do before you jump right into this headfirst. You will need to make sure that you research any market that you are entering in and be sure that there is actually money in it. This is the downfall of many people. They think that they will make tons of money and be a huge success but there is just not anybody there to buy what they are selling. So research and more research is the key to making a wonderful life as a lifestyle entrepreneur.
Entrepreneur – Consultancy (With Merits and Methods)
Entrepreneur invests their valuable fund and energy for the establishment of an enterprise. The basic expectation of the entrepreneur is to make the enterprise competitive and viable. For this purpose, he needs continuous and regular support mechanisms to ensure its successful operations.
For failure, he should try for introspection and for success, he should visualise for immediate challenges. Both these problems can be solved with the help of entrepreneurial consultancy and monitoring. These mechanisms provide continuous basis for entrepreneurship development.
Generally, an entrepreneur faces large number of problems during the course of production or business process and to solve these problems he needs effective and useful consultancy services. There are technical consultancy organisations who extend their services to entrepreneurs, specially first generation entrepreneurs.
However, it is their duty to provide consultancy services from time to time for making them more motivated in fulfilment of entrepreneurial mission. These consultancy organisations are required to set the real effect of their consultancy services in solving the problems of entrepreneurs.
They should try to assess to what extent these entrepreneurs are successful in operating their enterprises a successful venture. At the same time, these consultancy organisations should also develop monitoring activities effectively so that they can get effective feedback and thereafter suggest necessary modification in their consultancy support system.
Moreover, there is a relationship of professional consultant and customer between the entrepreneurs and consultancy organisations. Effectiveness of these organisations are also judged on the basis of entrepreneurial success of an enterprise generally seen as a basic point for the success of these consultancy organisations.
In practice, consultancy is a process of starting the function of planned progress of customer and motivating him with ancillary relationships. In practical terms, consultancy and assistance are used as complementary to each other. But in technical sense, both are different concepts.
Consultancy develops base for any activity or operation. However, assistance improves the utility of that particular activity or operation. In this way we can say that assisting process ensures value addition in the effectiveness or usefulness of consultancy made available by the consultant to his customer.
Ultimately, it helps the customer to achieve his objectives early and effectively. In practice, it may also be a tool in the development process of the customer. But assisting the customer is an important part of the activities being undertaken by the institution concerned.
An entrepreneur is an owner of the business as well as its manager. He coordinates the productive resources. To get his venture a success, he needs managerial consultancy. The institution engaged in the entrepreneurship development process provides consultancy services with regard to entrepreneurship development function.
In this process, consultancy organisation or organisation involved in entrepreneurship development programme, provide managerial consultancy services at various stages and activities of entrepreneurship development. However, managerial consultancy system depends on the nature and level of entrepreneurship.
Actually, entrepreneur is just a customer for the organisations engaged in entrepreneurship development or consultancy organisations. The success of these organisations is directly linked with the level of success of the entrepreneur.
Main objectives of entrepreneurial consultancy are as follows:
(i) To study the entrepreneurial behaviour by evaluating the background, personality, knowledge and skill of an entrepreneur.
(ii) To know the entrepreneurial environment under which entrepreneurs are working.
(iii) To identify the problems of entrepreneurs under pre planning and post planning situations of entrepreneurship.
(iv) To know the entrepreneurial feasibility for starting and running an entrepreneurial unit.
(v) To enable the entrepreneur for making his plan of action as a real life workable business unit.
An entrepreneur is required to take different types of decisions under entrepreneurial process. He feels the need for consultancy in ensuring effective formulation and implementation of entrepreneurial objectives. In this way, under consultancy process, a consultant provides consultancy to the entrepreneur for evaluating the socio-economic conditions of the society as such and motivate him to adjust with the existing environment.
Consultancy is a short but useful process for fulfilling the entrepreneurial objectives. However, consultation process is relatively a broader framework under which support systems and helps are extended to the prospective entrepreneur. Consultancy helps in seeking professional aids, involving in entrepreneurial discussions and solving the problems of entrepreneurship.
In practice, entrepreneur identify the problems and thereafter consultants are supposed to analyse the approaches of entrepreneur in solving these problems. Thus, the consultants extend their consultancy services to the entrepreneurs as per the nature of problems and again try to activate the entrepreneurs.
Consultancy can be helpful to the entrepreneurs at any level of their decision making process. However, it totally depends upon the forms of consultancy required by the entrepreneurs and how this consultancy is useful for a particular level of entrepreneurial behaviour.
Moreover, need for consultancy arises at preplanning level of the potential entrepreneurial behaviour and it also needs a broader framework of information at this stage. In this way, it is clear that the functionality of consultants is generally governed by the need and nature of entrepreneurial decision making process.
Important merits of the method are as follows:
(i) It facilitates detailed study of the proposed or existing business.
(ii) It encourages effective interaction between the consultant and the entrepreneur.
(iii) It enables the entrepreneur to get specialised expertise in his business field.
(iv) It ensures higher level of satisfaction to entrepreneur.
(v) It helps in guiding the entrepreneur on continuous basis.
1. Direct Method:
Under this method, consultant extends advisories to entrepreneurs by seeking information about his proposed or existing business. He argues his case before the entrepreneur and also gives his lecture before him. At the end of it, he tries to solve the problem or queries asked by the entrepreneur.
Thereafter it may be converted into question answer. Now a days, it has been replaced by presentation form before the entrepreneur and his managerial team. This method enables the consultant to extend his consultancy as per his standing or goodwill in the industry and provides sufficient time to the entrepreneur to take his own decisions with regard to the business proposed or operated.
But this method is not as practical as it fails to motivate the entrepreneur to think on his own intensively about his business problem. Actually, entrepreneur becomes totally dependent upon the consultant for every problem of his business and fails to solve these problems on his own thinking’s and initiatives. This method also mars the creativity of the entrepreneur which is the essence of the entrepreneurship.
2. Indirect Method:
Under this method, entrepreneur gets sufficient opportunities to grasp the problems and solve them without taking any advice or directions from the consultant. The consultant is supposed to act as patient listener in place of discussion. Under this method, consultant tries to motivate the entrepreneur for identifying the problem and think and take initiative to solve them.
The consultant only develops the base for solving the problem before the entrepreneur, and motivates the entrepreneur to take his own decisions. In other words, consultancy is not supposed to solve the problem directly but drives the entrepreneur towards solution of the problem.
Important merits of the method are as follows:
(i) It provides an opportunity of entrepreneurial awareness among the entrepreneurs.
(ii) It enables the entrepreneurs to undertake intensive study of environment.
(iii) It ensures implementation of self-formulated directives by the entrepreneur for his own development.
(iv) It facilitates the formulation and implementation of work/business plan by the entrepreneur.
(v) It encourages the entrepreneur to seek the expertise of consultants for reviewing his work performance.
(vi) It facilitates the entrepreneur to identify the merits and limitations of his own judgments/decisions by reviewing his own work performance.
(vii) It encourages the entrepreneur to use previous successful decisions as a base for future decisions. In this way, he can minimise his dependence on consultancy organisations.
(i) Development of open environment is necessary for both the parties —consultant and entrepreneur, to bring effectiveness in consultancy process. It will enable the entrepreneur to undertake intensive study of the problem.
(ii) Exchange of information should be undertaken on regular basis between an entrepreneur and government officials.
(iii) Consultants are required to give assistance through their consultancy skill by attending the meeting organised for the entrepreneur and government official.
(iv) Government officials should be trained in providing information and assisting formally or informally to the entrepreneur.
(v) Consultant should be fully prepared for effective consultancy and use his previous experiences and information for effective consultancy.
(vi) Organisations engaged in entrepreneurship development functions should develop effective consultancy structure on regular basis because they are generally related with every stage of entrepreneurship development.
Entrepreneur – Laws
The following laws will provide guidance on how to act, think and work in a slant way. You can apply these laws to all areas of your life, work and business to get bigger results from the time you invest.
1. Multiple Rewards:
Utilize your time in such a way so that you can be rewarded multiple times for your efforts and the hours invested by you. Focus on productive work and time. Package your time, efforts and knowledge into the quality product. Utilize your time properly because once time will pass it will never come again?
2. Mistakes are Gifts:
Don’t disappoint with your mistakes. Mistakes are the way to learn the things. Mistakes teach us but only when you will do a deep analysis of your mistakes. Try to find out what went wrong and next time what precautions you will take. It gives you clue about your tasks, work or strategies where you have done mistakes and how to improve it. The mistakes will aware you for the future mistakes. It gives you the correct information that you should apply for the best results and next time you will see that your decision is the best one.
3. Know when to Stop:
If you are doing something wrong unknowingly or not comfortable with the present tasks then, be prepared to stop what you’re doing. You should have a deadline for your every task. Try to complete those tasks on time. But if you are not capable to do it then take stop and try to do something different. Don’t continue with the business otherwise you and your business will suffer. Do not involve yourselves in a single project for a long time. Make a list of all mistakes and good things that you have learned for the project. Analyze those factors and better do in near future.
4. Use Your Force:
Think logically; try to get maximum from the small one. Do such an innovative work that will have a big impact. Try to use business tactics and knowledge. Try to learn from the others’ success stories and take all the relevant ideas. Focus will help but there are other forms of leverage too. Here are just two. Make a communication with everyone who can help you in the business. You don’t have to do it all yourself. Use your network. Ask and you shall receive. Give and you shall get.
5. Don’t Be Busy – Be Effective:
Don’t waste your hours simply being “busy”. Being busy does not cause you to be wealthy. So don’t be busy – be effective. Involve in more productive work instead of the unproductive work. Protect yourselves from wasting the time. Remember the 80:20 rule. Typically 20 per cent of the things you do will be responsible for 80 per cent of the results you get. So focus on the 20 per cent that gets the result.
6. Always Look for the Easy Route:
A single task can be done in a different way. Do not immediately start your work on the task. First analyze it think on different alternatives to accomplish the tasks and then select the best one most suited for your task. You must select a best technique to run your business. Think logically while running business. Think broadly, one task can be done in different way, look that task which suits best to your business.
7. Measure Progress by what You Reap:
Your success will tell you about your progress. How much efforts you will take will not matter until it will lead you towards the success. Analyze your outcomes and compare it with the inputs the output should be more than input. Measurement of the progress gives true picture of your business. Ask questions to yourselves, have I increased my customers’ base? Have I increased profit? Have I grown my business? And so many questions you can ask. It tells you where you are lagging and where you are gaining strength so that accordingly you can make improvement into your business.
Entrepreneur – Economic Development: Process and Ways
Entrepreneurship has been identified by many economists as a vital force in the process of industrialisation in particular and economic development in general. Economic development essentially means a change. But, at the same time, it is very difficult to define precisely the phrase ‘economic development’.
One should realise that the term economic development does not convey the idea of total development of the society. It only focuses itself on one aspect and one dimension of general development. Economic development can be defined as a move towards even more efficient and differentiated methods of supplying people with the requirements for survival and improvement.
Many a times economic development is interpreted as synonymous with industrialisation because it is viewed by the poor regions as a superior way of life. But economic development cannot be equated with industrialisation. When economic development is analysed with the yard stick of extent of industrialisation, it implicitly undermines the importance of primary sectors like agriculture.
The high dependency ratio of people on the primary sector is not the cause of underdevelopment but the consequence of it. These two sectors are complementary to each other in the development process. Moreover, economic development is much more than industrialisation, it is an upward movement of the entire social system.
Economic development includes increase in productivity, social and economic equalization, improved institutions, attitudes, rationally coordinated system of policy measures and removal of undesirable conditions and systems that perpetuated a state of underdevelopment. It appears that economic development involves something more than economic growth and it includes both growth and change. Moreover, economic development is not only a quantitative phenomenon but has qualitative dimensions too.
The criterion of per capita income can be considered as a good indicator of regional variations in economic development. As the economic development is essentially a process of increase in per capita income, it should not appear as a temporary or short sustained phenomenon.
There are other sub-criteria which have to be considered along with the primary criterion. The nature of distribution of income in the society is an integral part of the development. The secondary objectives like level of consumption, level of employment, diversification against concentration of the economy are also important.
Economic development is not to be considered as an end in itself, but is a means to an end. Economic development is concerned, ultimately, with the achievement of better nourishment, better education, better health, better living conditions and an expanded range of opportunities in work and leisure for the people. Therefore, a rise in real per capita income is a relevant criterion to judge the extent of development in a region as it is a means for the attainment of desired standards in nourishment, education, health, and living conditions.
The entrepreneur is the key to the creation of new enterprises that energise the economy and rejuvenate the established enterprises that make up the economic structure.
Entrepreneurs initiate and sustain the process of economic development in the following ways:
1. Improvement in Living Standards:
Entrepreneurs set up industries which remove scarcity of essential commodities and introduce new products. Production of goods on mass scale and manufacture of handicrafts, etc., in the small scale sector help to improve the standard of life of a common man. These offer goods at lower costs and increase variety in consumption.
2. Economic Independence:
Entrepreneurship is essential for national self-reliance. Export goods and services on a large scale and thereby earn the scarce foreign exchange for the country. Such import substitution and export promotion help to ensure the economic independence of the country without which political independence has little meaning.
3. Backward and Forward Linkages:
An entrepreneur initiates change which has a chain reaction. Setting up of an enterprise has several backward and forward linkages. For example- the establishment of a steel plant generates several ancillary units and expands the demand for iron ore, coal, etc. These are backward linkages. By increasing the supply of steel, the plant facilitates the growth of machine building, tube making, utensil manufacturing and such other units. Entrepreneurs create an atmosphere of enthusiasm and convey a sense of purpose.
4. Generation of Employment:
Emphasis on modernisation which usually results in automation, use of high technology, and technology up gradation initiated during 1980s and structural changes introduced by the Government during 1990’s are likely to give much rise to capital-intensive rather than labour intensive industry.
Entrepreneurship development training which helps in strengthening informal and unorganised sector is expected to motivate enterprising people to opt for self-employment and entrepreneurial career. It will therefore, help in solving the problem of increasing unemployment to some extent.
5. Harnessing Locally Available Resources:
India is considered to be very rich in natural resources. In spite of about five decades of planned development a large number of states have remained economically backward. A few large scale industries started by entrepreneurs from outside the state in economically backward areas may help as model of pioneering efforts, but ultimately the real strength of industrialisation in backward areas depends upon the involvement of local entrepreneurship in such activities.
6. Balanced Regional Growth:
Medium and large scale industries can only be started with huge investment which is either available with well-established industrial houses or need to be drawn from public exchequer. Also, promotion of such industries does not help in reducing disparities of income and wealth.
7. Reducing Unrest and Social Tension amongst Youth:
Many problems associated with youth unrest and social tension are rightly considered to be due to youth not being engaged in productive work. In the changing environment where we are faced with the problem of recession in wage employment opportunities, alternative to wage career is the only viable option. The country is required to divert the youth with latent entrepreneurial traits from wage career to self-employment career. Such alternate path through entrepreneurship could help the country in defusing social tension and unrest amongst youth.
8. Innovations in Enterprises:
Business enterprises need to be innovative for their survival and better performance. It is believed that smaller firms have relatively higher necessity and capability to innovate. The smaller firms do not face the constraints imposed by large investment in existing technology. Entrepreneurship development programmes are aimed at accelerating the pace of small firm’s growth in India. Increased number of small firms is expected to result in more innovations and make the Indian industry compete in the international market.
Entrepreneur – Difference between Entrepreneur and Manager
An entrepreneur is a person who creates and manages a business. He takes on challenges and lives his dream. In simple terms, entrepreneur is the practitioner of the domain called entrepreneurship. Very often there would be people who have access to capital but do not have the idea or drive to start and run a business. These people adopt a role of promoter wherein they fund an enterprise which is run by an entrepreneurial team. These people are called as promoters. Often entrepreneur and manager in an organization are confused with each other.
An entrepreneur is different from a manager in the following manner:
1. An entrepreneur thinks beyond constraints and resources and looks for creative and innovative ways to solve the problem at hand. A manager tries to achieve a defined task with available resources.
2. An entrepreneur as the owner of the enterprise is profit focused. A manager as an employee is focused on utilization and effectiveness of operation.
3. An entrepreneur takes complete responsibility for the firm’s performance. The manager is responsible only for his area of work.
4. An entrepreneur cannot predict the amount of profit he is likely to make. A manager is assured of the salary that he is going to make.
Some of the Comparison between Entrepreneur and Manager:
Entrepreneur Vs Manager:
1. Entrepreneur is an innovator
2. Entrepreneur is a moderate
3. Entrepreneur is not guided by the motive to fixed profit. He continuously puts his efforts for achieving the goal-reward of the entire process in connection.
4. Entrepreneur is self-employed.
1. Manager keeps in managing the business on established rules, policies and procedures.
2. Manager does not undertake risk-taker
3. Manager is interested in salary. His salary is and certain
4. Manager is salaried person and his own boss dependent upon his employer.
Entrepreneur – 7 Tips for Becoming a Successful Entrepreneur
Tip # 1. Collaboration:
Connecting and working with partners, clients and other significant players in your network, which will probably be scattered across the globe and contain more Virtual’ relationships than face- to-face ones.
Tip # 2. Creative entrepreneurs are not Freelancers:
Creative entrepreneurs are not freelancers. Freelancers earn a living by doing paid work for clients, usually charging by the hour, day or project. Freelancers think in terms of ‘getting more work’. Creative entrepreneurs think in terms of creating opportunities, producing results and making profits. This leads them to create systems and businesses that generate wealth and free up their time for their next big idea.
Tip # 3. Stay in Contact:
Unlike other business that is in touch with their clients only at the time of purchasing of products, you must be in touch with your clients always. For example to make your relationship with the clients more strong you can use many innovative ways such as sending mail/email on their birthday, reminding them about their purchase, home delivery, providing better services etc., innovative entrepreneurs always try to search for such a unique method of servicing that is not at all available in the market and that helps them to become successful in their business. It’s easier to maintain a relationship than establish a new one.
Tip # 4. Community:
This means networks of people. That could be local communities, students, artists entrepreneurs or researchers. The collective has a power beyond the individual. You need to support the exploitation of opportunity. It will provide the anything that is possibly ideal.
What really has to happen is that someone with an idea is able to find someone who can help to make it real. Places like the Digital Hub have shown that if you get a group of like-minded people together they can help each other to succeed. The social media network revolution, already in evidence on the internet today, is the start of things to come.
Tip # 5. Communicate with Your Vendors:
Vendors are the best way to know about current happening in the market. Call the vendors you’ve used most; they know who’s buying and succeeding even in a slow economy. Make friends at all levels of your industry. Friends are an important source of information. Take all possible information from them. Utilize that information for your creativity and innovation. You never know where your next job referral will come from.
Tip # 6. Maintain Industry Presence:
Maintaining industry presence will help you to collect all relevant information about business. Interact with other entrepreneurs. Know what are they doing? How innovative they are! How are they serving to their customers? Maintain industry presence; even though things are slow, stay active in professional affairs. Attend the monthly meetings, trade shows, exhibitions and work for charity to show off your creative skills.
Tip # 7. New Clients:
Cold call new clients whether you need them or not. Successful entrepreneurs always have a few new clients ready to step in to replace those who step out. What’s the real key to success? Get up and get busy — there’s no time for sulking.
Entrepreneur – Intrinsic Motivators for Entrepreneurship
An entrepreneur needs to draw motivation from within.
Some of the intrinsic motivators that may actually help in the journey of entrepreneurship are given below:
1. The reason to start – The entrepreneur typically has a very strong sense or feeling to start something. It could be around a skill or towards a cause. At times, it may be around an opportunity that has been identified or a new trend or opportunity that an entrepreneur wants to capitalise on.
2. Risk taking ability – The tendency for an entrepreneur to take risk allows him or her to try out a lot more things. So, the ability to take more risks becomes another motivator to constantly try out new things and stay on the course of entrepreneurship.
3. Tolerance to failure – Entrepreneurs have a very healthy perspective of failure. They see failure very positively. They handle failure so that lessons are learnt and the institution moves ahead. This becomes a great motivation for entrepreneurs to move ahead with their enterprise.
4. Need for recognition or wealth – If an entrepreneur decides that he wants to create wealth or achieve recognition, this can be a strong motivator to start a venture.
5. Clearly defined goals – Entrepreneurs are typically dreamers, and because of their ability to imagine they tend to constantly visualize what may not be existing at that point in time. And this translates into a clear goal for them to pursue.
Entrepreneur – Ultrapreneurs (With Characteristics)
The concept of entrepreneurship is an evolved thing. Even though it has been there for a long time, its performance and execution evolve with the prevalent economic condition of the day. The entrepreneurs of 90s are a different breed in relation to their immediate predecessors from the 80s. Thus, the path of successful entrepreneurship is ever changing as the art and science of entrepreneurship is taking a new colour.
This new breed of entrepreneurs is challenging the old notion that entrepreneurs are born, not made. There are several reasons to this change. This may be due to global competitiveness, tight financing concept or for unforgiving business’ environment.
Now-a-days new products and services are conceived, created, tested, produced and marked very quickly and with great speed. Therefore, today’s entrepreneur needs to have a different mindset about establishing and operating a company. The mindset is what is called ultrapreneuring.
According to James B. Arkebauer, the concept of ultrapreneuring is to identify a business opportunity, determine its viability and form a company. It requires assembling a super competent management team who then develop, produce and market the product or service. They then sell the majority interest in the company, all of this with maximum resource leverage of both talent and money in the shortest optimum time period.
Gone are the days of developing a company to die with and no more cradle to grave management thinking. Ultra growth companies are not made to pass on to the next generation. Ultrapreneurs create them and then sell out, merge or combine. Their life-long challenge is to do it again and over again.
The following are some of the characteristics of an ultrapreneur:
(b) Action orientation
(e) Goal setting
(f) Growth orientation
Entrepreneur – Comparison between Entrepreneur and Enterprise
Difference # Entrepreneur:
1. Entrepreneur is person.
2. Entrepreneur is risk-taker.
3. Entrepreneur is decision-maker.
4. Entrepreneur engages producing.
5. Entrepreneur procures raw materials inputs in and other inputs for production.
Difference # Enterprise:
1. Enterprise is the business unit
2. Enterprise is the unit involving risk and uncertainty
3. Enterprise serves as the framework within which decision, concerning what to produce, how much to produce, where to produce are taken by the entrepreneur
4. Enterprise implies the harmonious interrelation or himself in and selling the product, service of functions and staff primarily for the purpose of making selling product or service.
Entrepreneur – Ethics
Entrepreneurial ethics is concerned with the relationship with the customer, environment and the society. Briefly, entrepreneurial responsibilities.
Many people identify ethics with vague feelings of approval or disapproval, it should be noted that ethics does not rest on feelings but on the careful examination of the reality around us. It may be unpleasant to fire a man, but ethics may demand just this. It may be hard to do the right thing in the face of strong disapproval and at great personal cost, but principles and not emotions should guide us. With all of these things in mind, we can now make some more positive statements about the nature of ethics.
Ethics is the science of judging specifically human ends and the relationship of means to those ends. In some way it is also the art of controlling means so that they will serve specifically human ends. From this point of view, ethics involves the use of any human knowledge whatsoever which has something to tell us about the relations between men or about the suitability of the available requirement.
As an art, moreover, it involves techniques of judging and decision-making as well as the tools of social control and personal development. Thus ethics really is or should be involved in all human activities.
Business ethics is concerned primarily with the relationship of business goals and techniques to specifically human ends. It studies the impacts of acts on the good of the individual, the firm, the business community, and society as a whole.
While it does not concentrate on the obligations which man has as a private individual and a citizen, these enter in, since the businessman is not three separate persons. This means that business ethics studies the special obligations which a man and a citizen accepts when he becomes a part of the world of commerce.
The social dimension of business ethics must not be overlooked since many major problems arise from the relationship of business to the broader society. Unless we recognise this social dimension from the very start, there is danger of reducing business ethics to a study of only individual relationships between men. This would simplify the work at hand, but only by robbing business of its full human significance.
Entrepreneur – Vision for Future
The entrepreneurship that contributes in a modest way to critical economic and social needs of the country and always strive to attain global leadership in all of its major initiative. This is the vision for future.
Pursuing this vision, over the next few years, entrepreneurs will pursue a strategy of:
1. Reinforcing competitive advantage of existing business through new capacities and synergistic acquisitions.
2. Scaling sizeable opportunities in the core sectors.
3. Forward integrating into retailing transportation fuels and creating new customer experiences.
4. Addressing the significant information and communications market opportunity in India and in the world.
5. Leveraging its strong balance sheet, cash flows and managerial capacity to create value by adding new capacities, acquisitions and turnaround of underperforming assets.
6. Developing strategic alliances in technology and product-market domains with global majors.
7. Fostering new higher education institutions for knowledge creation and sharing.
8. Leveraging its formidable strengths beyond Indian borders.
9. Reorienting the best practices to enhance productivity and quality (Q).
10. In addition to manufacturing products venture into developing manufacturing systems.
11. From having a manufacturing orientation to providing technical solutions.
12. From being an intermediate goods producer to being a final goods and services provider.
13. From licensing technology to developing technology.
14. From being an intellectual property user to an intellectual property creator.
15. In addition to operating in India to being a global company.
16. From building financial equity to fostering social equity.
This change will entail creating new organisational competencies such as:
1. Creating a customer-centric organisation.
2. Developing new products and technologies.
3. Exploring and producing new products to meet the new generation’s expectations.
4. Fostering and sustaining globally oriented management talent.
5. Training the human resources to harness the opportunities.
6. Encouraging entrepreneurship.
7. Focusing on Research and Development for sustainable development.
8. Imbibing new technology to enhance the value of the product.
9. Focusing on business ethics in managing the enterprises.
10. Managing customer-oriented supply chains.
11. Developing and protecting intellectual capital.
12. Managing strategic technology and product-market relationships.
Managing diversity in business, technologies, export, innovation and people are the primary challenges to the entrepreneur, as he marches ahead in realising his vision for future.