An entrepreneur is different from a conventional businessman. A businessman is someone who sets up a business with an existing idea offering products and services to customers. An entrepreneur, on the other hand, is a person who starts an enterprise with a new idea or concept or a better way to offer an existing idea or concept.
An entrepreneur conducts studies to assess the feasibility of the market as regards the proposed products or services. He makes an assessment of the resources required to run the enterprise and the problems that may possibly be faced. Such a blue print of an enterprise is termed as a business plan or a project report.
A business does not get started by itself. It is the entrepreneur who takes the risks and is willing to face devastating failure. He braves uncertainty, strikes out on his own wit, devotion to duty and singleness of purpose, somehow creates business and industrial activity where none existed before. His values and activities have become integral to corporate culture.
The entrepreneurs provide an important contribution in implementing government policies and achieving the national goals. They cooperate with the government for implementations of development plans of the country.
Successful entrepreneurs are passionate about making their business succeed. They genuinely love their work and are willing to put in extra hours to make their business succeed. Success gives them a joy that goes beyond money.
Entrepreneurs can bring about drastic changes in the very structure of the economy. They stand beyond challenges and make huge profits in every economic system. They are an important source of economic development. They create jobs, wealth and capital in the country. They promote investment, increase production and bring competitiveness in business, reduce costs of products and raise the standard of living in society.
A successful entrepreneur is always optimistic and is not disturbed by the present problems faced by him. He is always optimistic that the situation will become favourable for business in future.
Entrepreneurship development is the process of improving the knowledge and skills of the entrepreneurs. In other words, it can be said that entrepreneurship development is the process of enhancing an entrepreneur’s ability to develop, manage and organise a business venture, while keeping in mind the risks associated with it.
Entrepreneurial skills are the basic skills that help an entrepreneur to start, develop, finance and successfully run a business. Every entrepreneur who is starting a business must have a complete knowledge of the various aspects of his/her business, not only for the success of his venture; but also for its growth and expansion.
An entrepreneur has to have patience to see his efforts bear fruit. In the intervening period (time gap between the conception and implementation of an idea and its results), an entrepreneur has to assume risk. If an entrepreneur does not have the willingness to assume risk, entrepreneurship would never succeed.
Customer’s requirements and tastes keep on changing, therefore, production should meet the customer’s requirements. Thus, innovativeness is another important characteristic of an entrepreneur.
He always tries to out strive others by taking initiative in doing new things, i.e. exploring new products, new markets, new raw materials, new methods of production etc.
An entrepreneur is essentially a leader. According to K.L. Sharma, a psychologist, entrepreneurs are men who exhibit qualities of leadership in solving problems. They have to lead a team for achievement of goals.
Thus, an entrepreneur must have all universally accepted qualities of a leader, i.e. initiative, high energy level, self-confidence, human relations skills, motivational skills, creativity and keen desire to solve problems.
As Joseph Schumpeter says, entrepreneur’s task is “creative destruction”. He destroys to create new things. He changes and transmutes values. He searches change and responds to it. He is a change creator.
Ralph Harwitz writes in his book ‘Realities of Profitability’, the entrepreneur makes a happening, wants piece of action, is the growth man. Without him there is no happening, no action, no growth.
An entrepreneur is someone who perceives opportunity, organises resources needed for exploiting that opportunity and exploits it.
An entrepreneurial leader realises the importance of initiative and reactiveness as they go out of their way to provide all support to the team.
Decision-making is an important function because it includes stabilising organisation’s aims and objectives and changes them according to the changing conditions.
Creativity is probably the most important trait of an entrepreneur. Entrepreneurs often come up with innovative solutions and repurpose their products to market them to new industries. Repurposing means transforming a product for an alternative use.
Successful entrepreneurs do not believe that something cannot be done. They make determined efforts and work hard to achieve success in all their endeavours.
The myths of entrepreneurship are as follows:
- It is Easy to Start a Business: This depends on the scale of the enterprise. Starting up a large entrepreneurial venture is a challenging process. Small scale enterprises are easier to set up. Moreover, the rate of failure of new ventures is quite high all over the world. Just about one-third of all enterprises become profitable only after operating for several years.
- Lot of Money is needed to Startup a New Venture: Again, this depends on the type and scale of the business venture. There are ventures that can be started with a small amount of money. Big ventures need a lot of investment.
- A Startup cannot Borrow from the Banks: Today our government is promoting startup ventures and offering them loans on easy terms under various government schemes such as MUDRA (Micro-units Development and Refinance Agency) and MSME (Micro, Small & Medium Enterprises) scheme.
- Businesses either Flourish or Fail: This is not always the case. Some ventures initially falter or have lackluster growth rates. However, with right re-planning and effort they may go on to achieve a healthy growth.
- A Good Idea is the only Requirement for a Successful Enterprise: Remember that even the best of ideas need proper execution to become a reality. Ideas are important, but so are planning, talent, leadership, communication and a host of other factors.
The role and significance of entrepreneurs are discussed below:
- Organiser of Society’s Productive Resources: An entrepreneur is the organiser of society’s productive resources. He is the person who assembles the unused natural, physical and human resources of the society, combines them properly, establishes effective coordination between them and makes the economic activities dynamic.
- Helpful in Capital Formation: An entrepreneur is helpful in capital formation or we know that increase in the rate of capital formation is quite essential for the economic development of any country.
- Increase in Employment Opportunities: An entrepreneur creates maximum employment opportunities in the society by way of establishing new industries, developing and expanding the existing industries and by undertaking innovative activities.
A business does not get started by itself. It is the entrepreneur who takes the risks and is willing to face devastating failure. He braves uncertainty, strikes out on his own and through native wit, devotion to duty and singleness of purpose, somehow creates business and industrial activity where none existed before. His values and activities have become integral to corporate culture.
An entrepreneur has a good vision and sense of mission. He instills inspiration. He is able to recognise potentially profitable opportunities and to conceptualise the venture strategy. He is the key force in successfully moving the idea from the laboratory to the market place. He has the sense of accomplishment.
An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.
Characteristics of an Entrepreneur:
- Leadership
- Risk-taking
- Innovativeness
- Goal-oriented
- Decision-maker
- Highly optimistic
- Motivator
- Self-confident
- Action-oriented
- Dynamic agent
- High achiever
- Trust in self
The functions of an Entrepreneur:
- Innovation
- Risk-taking
- Decision-making
- Organization and management
- Size and scale of Business unit
- The appointment of Managerial and other workforce
- To arrange for factors of production and establishing coordination
- Procuring raw material and machinery
- Control and direction
- Finding a suitable market
- New inventions
- Establishing relations with government
- Establishing contacts with competitors
An entrepreneur is an individual who sets up business or businesses, identifies and solves problems, creative, innovative, opportunist, risk-taker, self-starter, and open-minded with the hope of making a profit from the enterprise.
Innovativeness: Customer's requirements and tastes keep on changing, therefore, production should meet the customer's requirements. Thus, innovativeness is another important characteristic of an entrepreneur.
He always tries to out strive others by taking initiative in doing new things, i.e., exploring new products, new markets, new raw materials, new methods of production, etc.
An innovative entrepreneur is a person who discovers totally new things. An innovative owner is a person who creates innovative products and services.
An innovative entrepreneur is a person who innovates the business processes in his business. An innovative person is a person who is not afraid to take a risk.
An entrepreneur essentially a leader. According to K.L. Sharma, a psychologist, entrepreneurs are men who exhibit qualities of leadership in solving problems. They have to lead a team for the achievement of goals.
Thus, an entrepreneur must have all universally accepted qualities of a leader, i.e., initiative, high energy level, self-confidence, human relations skills, motivational skills, creativity, and keen desire to solve problems.
Advantages of Entrepreneurship as a Career:
- Independence
- Ambition fulfillment
- Excitement
- Freedom
- Wealth creation
- Status
Any two of the above are advantages of entrepreneurship as a career.
Disadvantages of Entrepreneurship as a Career:
- Risk
- Hard work
- Uncertain income
- The problem of finance
- Incompetent staff
Any two of the above are disadvantages of entrepreneurship as a career.
LONG ANSWER TYPE QUESTIONS
Entrepreneurs have the ability to produce more goods and services with less inputs. They play an important role in raising productivity. John Kendrick Bangs writes, “Higher productivity is chiefly a matter of improving production techniques, and this task is the entrepreneurial function par excellence.”
Two keys to higher productivity are research and development and investment in new plant and machinery. But there is a close link between R & D and investment programmes, with a higher entrepreneurial input into both.
Entrepreneur has become the ‘balancing wheel’ of modern global economy. They seek the unique product, the marketing breakthrough. They change technical frontiers and reshape public desires. They create wealth and employment.
If we go through the business history of India, we come across many names who have emerged as successful entrepreneurs, like Tatas, Birlas, Dalmia, Modi, Ambani etc. These business houses started as small scale enterprises and have made their name in the list of industrialists of world fame.
The success of small enterprises and their growth to leading industrial houses can be attributed to entrepreneurs themselves. Thus, it is important to understand the success story of such entrepreneurs. There are definitely some common personal characteristics in entrepreneurs.
The entrepreneur is in essence an institution which comprises of all people required to perform various functions. The task of such people is to innovate, adjust or combine various factors of production, and expand on account of change in demand and market conditions.
They must acknowledge the opportunities and must also be in a position to make opportunities out of a given situation.
- It gives Freedom: An entrepreneur is himself a boss or owner and he can take all the decisions independently.
- It can be Exciting: Entrepreneurship can be very exciting with many entrepreneurs considering their ventures highly enjoyable. Every day will be filled with new opportunities to challenge your determination, skills and abilities.
- It Allows to Set your own Earnings: The principal focus of entrepreneurship is wealth creation and improved livelihood by means of making available goods and services. Entrepreneurial ventures generate new wealth. New and improved products, services or technology from entrepreneurs, enable new markets to be developed and new wealth to be created.
- It offers Flexibility: As an entrepreneur you can schedule your work hours around other commitments, including quality time you would spend with your family.
- Status: Success in entrepreneurship brings a considerable fame and prestige within the society.
- It offers Ambition-fulfilment: Through entrepreneurship one can fulfil his ambitions into original products or services.
Some of the common disadvantages of entrepreneurship as a career are as follows:
- Huge Amount of Time: You have to dedicate a huge amount of time to your own business. Entrepreneurship is not easy and for it to be successful, you have to take a level of time commitment.
- Risk: Entrepreneurship involves high risk of loss. If the business fails then it will wipe away all the personal savings.
- Hard Work: Entrepreneur has to work very hard to make the new business very successful.
- Uncertain Amount: There is no regular or fixed income available to an entrepreneur. So, there is always uncertainty in terms of income.
- Incompetent Staff: A new entrepreneur may not be able to hire qualified and experienced staff so there are chances of incompetency by the staff due to lack of experience and knowledge.
- Freedom: There’s no denying that one of the best parts of being an entrepreneur is the complete freedom you have to do your own thing. No more bosses to report to, or managers peering over your shoulder — now you’ve gone from the bottom all the way to the top. You are the boss.
- Flexibility: Many people are excited to work for themselves because it means they can work when they want and where they want. Your commute could be as simple as walking to the couch or taking a stroll to the local coffee shop.
- Control: Many budding entrepreneurs value control. Getting your own venture off the ground requires heavy lifting but at the end of the day, it’s your dream and you are in control of making it happen. Having influence over the direction of the company is one of the most exciting parts of being an entrepreneur.
- Profits: Instead of making others richer, now your profits can slide right into your own pocket. This means each business success becomes your success, and as your business grows, so does your potential income. This can be incredibly motivating for many new entrepreneurs on the path to success.
- Responsibility: Not only is the future of your business in your hands but so is your next paycheck. Moving away from a salaried job to an unstable income is hard. There is great sacrifice that comes from starting your own business, and while the pay-off may be worth it, carrying the weight of responsibility can be difficult at first.
- Risk: As the business owner, you will take on much of the risk associated with starting a new venture. This means, instead of your employer taking the fall, you’re often risking your savings, time and effort to get your business off the ground.
- Workload: It takes serious hustle to get a new business up and running, and for the most part, you’ll be doing all the grunt work — especially in the early stages. All the heavy lifting can be hard for one person to manage. While it can be an exciting time, full of possibility, it can also be exhausting.
- Limitations: The idea of running your own business can be very different to the reality. From late nights to lonely weekends, being an entrepreneur is not without its challenges. You can also find it quite limiting in the early stages, without the funding of a big name or well-established business behind you.
The characteristics of successful entrepreneurs are as follows:
- Goal-oriented: Entrepreneur is goal-oriented. Firstly, he sets a goal to achieve, i.e. to earn profit by producing goods and services and after reaching one goal he proceeds to another goal.
- Highly Optimistic: A successful entrepreneur is always optimistic and is not disturbed by the present problems faced by him. He is always optimistic that the situation will become favourable for business in future.
- Trust in Self: An entrepreneur does not believe in luck or fate. He believes in his own firm decisions and actions. He has trust in his perseverance and creations. He pulls his own strings.
- Leadership: An entrepreneur must possess the characteristics of leadership and must lead a team for achievement of goals. The leader is able to clearly articulate their ideas and has a clear vision.
- Innovativeness: With the changing needs and requirements of customers production should meet requirements with the help of innovative ideas. An entrepreneur does not have to restrict itself to just one innovation rather he must use combination of innovation.
- Decision-maker: An entrepreneur has to take many decisions to put his business idea into reality. He chooses the best suitable and profitable alternative.
The functions of an entrepreneur are as follows:
- New Inventions: Encouraging new inventions and introducing innovations in production, production techniques, sales, marketing, advertisement etc.
- Establishing Relations with Government: To establish relations with government and its functionaries. In this regards his functions are: (a) obtaining licences, (b) payment of taxes, (c) selling the product to government, (d) provision for export-import etc.
- Size and Scale of Business Unit: To decide about size of business unit, i.e., he wants to establish one production unit or more etc. which is dependent upon demand of the product. Similarly, he has to decide about scale of production, i.e., small scale, middle scale or large scale.
- Organisation and Management: An entrepreneur organises and manages various economic and human factors through planning, coordination, control, supervision and direction.
- Factors of Production: Another important function of an entrepreneur is the factors of production i.e. land, labour, capital etc., should be in right proportion and to maximise output of these factors is the responsibility of the entrepreneur.
Qualities/characteristics of a successful entrepreneur: The success of small enterprises and their growth to leading industrial houses can be attributed to entrepreneurs themselves. Thus, it is important to understand the success story of such entrepreneurs. There are definitely some common personal characteristics in entrepreneurs. After carefully scanning the qualities/characteristics of such entrepreneurs the principal ones were noticed, which are as follows:
- Leadership: An entrepreneur essentially a leader. According to K.L. Sharma, a psychologist, entrepreneurs are men who exhibit qualities of leadership in solving problems. They have to lead a team for the achievement of goals. Thus, an entrepreneur must have all universally accepted qualities of a leader, i.e., initiative, high energy level, self-confidence, human relations skills, motivational skills, creativity, and keen desire to solve problems.
- Risk-taking: Business risks are unpredictable but still an entrepreneur, with rational planning and firm decisions, bears the risks. An entrepreneur innovates an idea and undertakes the risk of commercially exploiting that idea by investing his funds because he recognizes the fact that - the higher the risk, the greater is the profit.
- Innovativeness: Customer's requirements and tastes keep on changing, therefore, production should meet the customer's requirements. Thus, innovativeness is another important characteristic of an entrepreneur. He always tries to out strive others by taking initiative in doing new things, i.e., exploring new products, new markets, new raw materials, new methods of production, etc.
- Goal-oriented: The entrepreneur is goal-oriented. First, he sets a goal to achieve, i.e., to earn profit by producing goods and services, and after reaching one goal he proceeds to another goal.
- Decision-maker: The entrepreneur is regarded as a decision-maker. He has to take many decisions to put his business idea into reality. He recognizes an idea i.e., a product, service, or market, and out of various alternatives before the time he has to make a choice between them. This involves decision-making to choose the best suitable and profitable alternative.
- Motivator: An entrepreneur has to get the work done through others. He has to create a spirit of teamwork and motivate them so that he gets wholehearted cooperation.
- Self-confident: An entrepreneur should have self-confidence in achieving his goals, otherwise he will not be able to convince his fellow beings to achieve his goals.
An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.
- Innovation: It includes: (a) Introducing new products, (b) Opening new markets, (c) New sources of raw material, and (d) New organization structure.
- Risk-taking: Choosing one among various alternatives, the end results of which are unpredictable.
- Decision making: Includes: (a) Stabilising organization's aims and objective and changing them according to changing conditions or to make the most profitable, (b) Division of work among subordinates, (c) Utilisation of financial resources, (d) Taking decisions on effective techniques, (e) Selling the produced as per the demand of customers, (f) Relationship with social functionaries.
- Organisation and management: To organize and manage various economic human factors. Under this category, the following are his functions: (a) Planning the enterprise, (b) Coordination and control, (c) Supervision, and (d) Direction.
- Size and scale of business unit: To decide about the size of a business unit, i.e. wants to establish one production unit or more, etc. which is dependent on the demand of the product. Similarly, he has to decide about the scale of productivity i.e., small scale, middle scale, or large scale.
- Appointment of managerial and another workforce.
- To arrange for factors of production and establishing coordination: Land, labor, capital, etc. in appropriate proportion and to maximize output by best utilization of these factors after coordinating them.
Role and Significance / Importance of Entrepreneur:
- Enterprising man
- Great achievers
- Reinvesting organizations
- Job creation
- First movers
- Higher productivity
- Visionary leader
- Economic prosperity
- The backbone of the capitalist system
- Protector of society's interest
- Catalytic agent
- An ingredient of a modern production system
OR
What are the myths about entrepreneurship?
- It is easy to start a business: In reality, starting a successful business is a very difficult and challenging process. The rate of failure of new ventures is high. Even after a period of seven years, only one-third of the enterprises are profitable. However, it is relatively easy to start a very small business than a large company.
- Lot of money is needed to start a new business: A business can be started with limited money. For example, Infosys Technology was started with only 10,000. In the beginning, you can hire space and equipment.
- A Startup cannot borrow from banks: Under various schemes like MUDRA, budding entrepreneurs also can raise loans from banks.
- Talent is more important than an industry: The nature of the industry an entrepreneur chooses has a great effect on success and growth. For example, if you enter an industry wherein competition is cutthroat or materials are scarce, you may fail.
- Most startups are successful: A large percentage of startups fail. The average profit of an owner-managed firm is 20,000 per month. A very few entrepreneurs earn more than employees.
The main advantages of adopting entrepreneurship as a career are as follows:
- Independence: An entrepreneur is his own boss. He can take all decisions himself. He need not obey someone.
- Ambition - Fulfilment: Some people want to convert their original ideas into a new product or service, for example, smartphones, electric vehicles, driverless trains, etc.
- Excitement: Entrepreneurship involves adventure. Some people resign from their well-paid jobs and launch their own venture due to excitement.
- Freedom: Entrepreneurship allows the freedom to try out one's ideas. Freedom-seeking people choose entrepreneurship as a career.
- Wealth Creation: Successful entrepreneurs create enormous wealth for themselves and their staff.
- Status: Success in entrepreneurship brings considerable fame and prestige.
- Risk: Entrepreneurship involves a considerable risk of loss. Failure can wipe away all the personal savings and lead to a considerable debt-burden.
- Hard Work: An entrepreneur has to work very hard to make the new business successful. His work schedule is unpredictable and he has to work late hours.
- Uncertain Income: No fixed and regular income is available to an entrepreneur. During the startup stage, it may be difficult even to meet household expenses.
- Problem of Finance: Raising the necessary funds is very difficult for a first-generation entrepreneur.
- Incompetent Staff: A new entrepreneur may not be able to hire and retain qualified and experienced employees. The administrative burden is heavy and faulty decisions can be very harmful to the business.
Wage employed people are those who work for a person or an organization and get paid for that work.
Self-employed people are those who start businesses to satisfy the needs of people.
A self employed person who is always trying to make his/her business better by taking risks and trying new ideas is an entrepreneur.
Ramya is entrepreneur as she is working to grow her business. She has also added a different idea to her business.
Read the above paragraph and answer the following questions.
1) What demand did Bharti identify in her village?
(b) Girls in her area liked to wear earrings
2) What is the local resource that Bharti used?
(a) Jute
3) How is Bharti helping her village grow?
(c) Both (a) and (b)
4) How was she creating more jobs?
(c) By providing jobs to local women
- Making Decisions.
- Managing the Business.
- Taking Risk.
- Create new method, Idea or Product.
- Every business idea needs to be unique or special.
- A person needs a lot of money to start a business.
- A person having a big business is an entrepreneur.
- Entrepreneurs are born, not made.
1.
Ramu owns a large clothes shop. Shamu has a small store selling
handmade sarees. Shamu does not call himself an entrepreneur.
Answer: A person having a big business is an entrepreneur.
2.
Anna has a great idea for a website. She has 5,000. She is waiting
for 20,000 more, so that she can start it.
Answer: A person needs a lot of money to start a business.
3.
In a city of thousands of tailoring shops, Gauri is a tailor who
stitches good quality clothes and has a very successful business.
Answer: Every business idea needs to be unique or special.
- Cooking in a restaurant — Wage employment
- Owning a clothing business — Self-employment
- Having a dosa selling stall — Self-employment
- Doctor working in Hospital — Wage employment
- Doctor has his/her own clinic — Self-employment
1 – Grow, 2 – Survive and 3 – Enter
1 – Grow, 2 – Enter and 3 – Survive
(1) Ravi’s customer comes to his store and starts shouting at him. He does not get angry. He listens to what his customer is saying.
Answer: (c) Patient
(2) Susheela decides to sell her company’s product in Sri Lanka. It does not sell and she has a loss. She apologizes to the people who work for her. She says she will plan better next time.
Answer: (c) Does not give up
(1) Ali has a diamond factory. He pays his employees on the 1st of every month.
Answer: (b) Manages the business
(2) Mary buys bulbs for her business from Noida. She learns that bulbs are cheaper in Faridabad. So, she decides to start buying bulbs from there.
Answer: (a) Makes decisions
(3) Rehnuma has two people who work for her. Every day, she spends one hour with them to learn about what they’ve done that day.
Answer: (c) Manages the business
-
Entrepreneurs can create jobs in the market.
Answer: True -
When many entrepreneurs sell mobile phones in a market,
the prices of phones increase.
Answer: False -
Entrepreneurs identify a need in the market and build a
product or service for it.
Answer: True -
Entrepreneurs who do not have an innovative idea cannot succeed.
Answer: True -
Entrepreneurs exhibit high risk-taking ability, but they take
calculative risks.
Answer: True -
Nothing matters more than the business idea.
Answer: False -
Any one can acquire and develop entrepreneurial skills.
Answer: True -
Entrepreneurship is a process of constant learning.
Answer: True
Four positive impacts of Entrepreneurship on society are: (Write any four)
- Accentuates economic Growth
- Stimulates Innovation and Efficiency
- Creates Jobs and Employment Opportunities
- Solves the problems of the society
- Encourages welfare of the society
(c) Growing
(d) All of the above
- No Fixed income
- Problem of generating finance in the beginning of career.
(a) Builder
(b) Lazy
Entrepreneurs run their businesses in a market. The market has people who buy products and services and people who sell them also. When people are buying and selling from each other, it is helpful for everyone because everyone involved makes money.
This is how entrepreneurs help in growing the area and society.
Increasing
