CHAPTER -9 (ENTREPRENEURSHIP DEVELOPMENT)

CONCEPT OF ENTREPRENEURSHIP DEVELOPMENT

 Entrepreneurship is the process of setting up one’s own business as distinct
from pursuing any other economic activity, be it employment or practising
some profession.
 The person who set-up his business is called an entrepreneur.
 The output of the process,that is, the business unit is called an enterprise.

CHARACTERISTICS OF ENTREPRENEURSHIP
1. Systematic Activity:
 Entrepreneurship is a systematic, step-by-step and purposeful activity.
 It has certain temperamental, skill and other knowledge and competency
requirements that can be acquired, learnt and developed, both by formal
educational and vocational training as well as by observation and work
experience.
2.Lawful and Purposeful Activity:
 The object of entrepreneurship is lawful business. It is important to take
note of this as one may try to legitimise unlawful actions as
entrepreneurship on the grounds that just as entrepreneurship entails risk, so
does illicit businesses.
3. Innovation:
 From the point of view of the firm, innovation may be cost saving or
revenue-enhancing.
  Entrepreneurship is creative in the sense that it involves creation of value.
 By combining the various factors of production, entrepreneurs produce
goods and services that meet the needs and wants of the society.
 Entrepreneurship is creative as that it involves innovation-
• introduction of new products,
• discovery of new markets and sources of supply of inputs,
• technological breakthroughs as well as introduction of newer organisational
forms for doing things better, cheaper, faster and, in the present context,
4. Organisation of Production:
 Organisation of production is the manner in which the entrepreneur organize
the process of production of goods or services in his business.
 It is through organisation of production that entrepreneurs are able to
effectively coordinate the factors of production(.i.e. raw materials , labour
and capital).
 Production, implying creation of form, place, time personal utility, requires
the combined utilisation of diverse factors of production, land, labour,
capital and technology.
 Entrepreneur, in response to a perceived business opportunity mobilises
these resources into a productive enterprise or firm.
 The core of organisation of production is the knowledge about availability
and location of the resources as well as the optimum way to combine them.
 An entrepreneur needs negotiation skills to raise these in the best interests
of the enterprise.
 Organisation of production also involves product development and
development of the market for the product.
5. Risk-taking:
 Business risk refers to the probability of losses or inadequate profits due to
uncertainties or unexpected events , which are beyond control.
 Entrepreneurs take high risks.
NEED OF ENTREPRENEURSHIP DEVELOPMENT
1.Life line of a nation :
 Entrepreneurship is the yardstick to measure the development of any
country as no country can prosper and grow without the development of
entrepreneurship.
 So every nation tries to increase its trade by having more enterprises.
2.Provides innovation
 Entrepreneur is an innovator who tries new methods of production , new
technology, new ways of marketing etc.
 He develops new business ideas and puts them into action to enhance the
process of economic development.
3.Growth of economy
 The entrepreneurs adapt to changes as changes takes place in the
environment. The changes adopted by entrepreneurs in enterprises even
bring changes in the society and economy.
 Latest technology used by enterprises not only brings growth in the
enterprises but also brings growth of economy at large.
4.Increased profits
 An entrepreneur always tries to minimise cost.
 He always tries to get optimum utilisation of resources.
 The reduction of cost and increase in efficiency always result in increase in
profit.
5.Employment opportunities
 Entrepreneurship not only provides the scope for self-employment nut also
offers employment to large number of people as in the case of successful
enterprises.
 Growth in entrepreneurial activities leads to more and more employment.
6.Social benefits
 Entrepreneurs always try to adopt latest technology and raise the standard of
living by providing good quality products and services at lowest cost.
  By setting up enterprises in backward areas, they try to bring balanced
regional growth.
 By making optimum utilization of resources, they save scarce resources of
society.
Process of entrepreneurship

Scanning the environment for

entrepreneurial opportunities

Development of product/service
idea

Assessment of feasibility of the idea

and preparation of a business plan

Appraisal by the funding agencies

Resource mobilisation

Project Commissioning and launch

Adaptation and management of

growth
(i) Scanning for Opportunities:
 The first step involved in starting up a business is to look out for various
business opportunities.
 For scanning the opportunities an entrepreneur uses his personal
observations, contacts, official reports, published documents, surveys, etc.
 He carefully analyses each opportunity and works out how he can use them
to create goods and services.
 He analyse the situations based on several factors such as market size,
where to procure goods from, at what price to sell, probable competitors,
etc.
 Opportunities are scanned not only at the domestic/national front but also at
the international front.
(ii) Development of product/service idea:
 Scanning of opportunities helps in identifying the broad segment or market
for the business.
 The next step is to decide a particular product or service in the selected
market segment.
 For instance, suppose an entrepreneur decides to set up a venture in the fast
food market. He must decide the products or combination of products that
he would supply.
(iii) Assessment of feasibility of the idea and preparation of a business plan
 Once the product or service is chosen it becomes important for the
entrepreneur to check whether the idea is practically possible or not.
 The entrepreneur needs to find this out, on the basis of different parameters
such as whether the technology to be used is available, whether the product
will derive profits, is the idea financially feasible and whether the good will
face any legal restrictions.
(iv) Appraisal by Funding Agencies:
 To set up the business, an entrepreneur requires funds.
 For receiving the required funds, the entrepreneur discusses the business
plan and the feasibility reports with the financial agencies.
  The financial institutions provide the funds only when they are convinced
about the plan and its feasibility.
 Sometimes the financial institutions require the entrepreneur to fill a
performa detailing about the plan.
(v) Resource Mobilisation:
 After the appraisal is received from funding institutions, the entrepreneur
starts identifying and collecting the resources that are needed for the
commencement of the project.
 The resources required comprise of raw materials, technology, human
resources, machines, etc.
 The entrepreneur tries to obtain the resources at the minimum possible cost.
(vii) Adaptation and management of growth
 The role of an entrepreneur do not ends with the establishment of enterprise.
 He performs various other day-to-day functions such as organising goods
and services, ensuring production, keeping an eye on competition etc.
 Thus, he needs to manage the business and continuously strive for better
growth and development.
Startup india scheme
 Honorable Prime Minister Dr. Narendra Modi announced on 15th August,
2015 "Start-up India, Stand up India" to promote Bank Financing for
startups and offer incentives to boost entrepreneurship and job creation.
 The Startup India Scheme is a flagship initiative of the Government of India
with an objective to carve a strong ecosystem for nurturing innovation and
startups in the country.
1. Simplification and Handholding:
 In order to make compliance for startups, friendly
 and flexible, simplifications are announced.
2. Startup India Hub:
 The objective is to create a single point of contact for the entire startup
ecosystem and enable knowledge exchange and access to funding.
 3. Legal support and Fast tracking Patent Examination:
 The scheme for Startups Intellectual Property Protections (SIPP) is
envisaged to facilitate protection of patents, trademarks and designs of
innovative and interested startups.
4. Easy Exit:
 In the event of a business failure and wind up of operations, procedures are
being adopted to reallocate capital and resources towards more productive
avenues.
 This will promote experimentation with new and innovative ideas, without
fearing complex and long drawn exit process.
5. Harnessing private sector for incubator setup:
To ensure professional management of government sponsored/funded incubators,
the government envisages setting up of incubators across the country in PPP
mode.
6. Tax exemption:
The profits of startup initiatives are exempted for Income tax for a period of three
years.
Ways to fund startup
In addition to the government plans that offer startup capital and bank loans, the
funding for startups can also be availed in the following ways:
1. Boot Strapping:
 Commonly known as self financing, it is considered as the first funding
option because by stretching out your personal savings and resources, you
are tied to your business.
 However, it is a good option of funding only if the initial requirement is
small and handy.
2. Crowdfunding:
It is the pooling of resources by a group of people for a common goal.
Crowdfunding is not new to India.
  There are many instances of organisations reaching out to common people
for funding.
 However, the emergence of platforms that promote crowdfunding is fairly
recent to India. These platforms help startups or small businesses to meet
their funding requirements.
3. Angel Investment:
 Angel investors are individuals with surplus cash who have keen interest to
invest in upcoming startups.
 They also offer mentoring or advice alongside capital.
4. Venture capital:
 There are professionally managed funds which are invested in companies
that have huge potential.
 Venture capitalists provide expertise, mentorship and act as a quality test of
where a business organisation is going, evaluating business from
sustainability and scalability point of view.
5. Business Incubators and Accelerators:
 Business incubator is a company that helps new and startup companies to
develop by providing services such as management training or office space.
Example- SIDBI SIIC,IIT, kanpur
 A business accelerator is a program that gives developing companies access
to investors and other support that help them become stable , self –sufficient
businesses. Example- AXILOR.
 Early stage business can consider incubator and accelerator programmes as
a funding option.
 These programmes assist hundreds of startup businesses every year. These
two are generally used interchangeably.
 However, incubator is like a parent who nurtures the business (child),
whereas, accelerator helps to run or take a giant leap in business.
 Incubators and accelerators ably connect the startups with mentors,
investors and fellow startups using this platform.
6.Microfinance:
Micro finance is basically access to financial services to those who either do
not have access to conventional banking services or have not qualified for a
bank loan.
7. NFBCs:
NBFCs (Non Banking Financial Corporation) provides banking services
without meeting legal requirement/definition of a bank.
EXAMPLE – Bajaj Finance Limited.
INTELLECTUAL PROPERTY RIGHTS (IPR)
Intellectual property (IP) refers to the creations of the human mind, like
inventions, literary and artistic works, symbols, names, images and designs
used in business.
Intellectual property is divided into two board categories:
 industrial property , which includes inventions (patents), trademarks,
industrial designs and geographical indications,
 copyrights, which includes literary and artistic works, such as novels,
poems, plays, films, musical works, artistic works, such as drawings,
paintings, photographs and sculptures and architectural designs.
WHY IS IPR IMPORTANT?
i. It encourages creation of new, path breaking inventions, such as cancer cure
medicines.
ii. It incentivises inventors, authors, creators, etc., for their work.
iii. It allows the work created by a person to be distributed and communicated
to the public only with his/her permission. Therefore, it helps in the prevention
of loss of income.
iv. It helps authors, creators, developers and owners to get recognition for their
works.
Intellectual property includes
1. Patents
A patent grants property rights on an invention, allowing the patent holder to
exclude others from making, selling, or using the invention.
Inventions allow many businesses to be successful because they develop new
or better processes or products that offer competitive advantage on the
marketplace.
2. Trademarks
A trademark is a word, phrase, symbol, or design that distinguishes the source
of products (trademarks) or services (service marks) of one business from its
competitors.
In order to qualify for patent protection, the mark must be distinctive.
For example, the Nike trademark is shown below.

3.Copyrights
 Copyrights protect original works of authorship, such as literary works,
music, dramatic works, pantomimes and choreographic works, sculptural,
pictorial, and graphic works, sound recordings, artistic works, architectural
works, and computer software.
 With copyright protection, the holder has the exclusive rights to modify,
distribute, perform, create, display, and copy the work