Chapter 3
Chapter 3
Chapter 3
Objectives
• Understand meaning of the term ‘Entrepreneur’
• Explore various personality characteristics and skills of a successful entrepreneur.
• Understand the evolution of the term entrepreneur.
• Describe who entrepreneurs are and what they do?
• Discuss the various entrepreneurial decisions.
• Outline the steps in entrepreneurial process
Entrepreneur
Who is an Entrepreneur?
An entrepreneur is one who creates a new business in the face of risk and uncertainty for
the purpose of achieving profit and growth by identifying significant opportunities and
assembling the necessary resources to capitalize on them.
What is entrepreneurship?
What is an entrepreneurial career path?
Note: Although many people come up with great business ideas, most of them never act on
their ideas but Entrepreneurs do. Entrepreneurs can create value in a number of ways:
• inventing new products and services
• developing new technology, discovering new knowledge
• improving existing products or services
• finding different ways of providing more goods and services with fewer resources
Entrepreneurship
Entrepreneurship may be defined in various ways, but the four key elements
involved in it are:
(i) Innovation
(ii) Risk-taking,
(iii) Vision
(iv) Organising skill. All the four elements are inter-related and form a continuous
process in business.
……..Definition of an entrepreneur
F. H. Knight, defines entrepreneurs as a specialized group of persons who bear risks and deal
with uncertainty.
According to Francis A. Walker “An entrepreneur is one who is endowed with more than
average capacities in the task of organizing and coordinating the various factors of production.
David C. McClelland wrote that “an entrepreneur is an individual who takes moderate risks and
brings innovation.
Henry Ford said that, Entrepreneur can do anything with passion and enthusiasm. Enthusiasm
is the yeast that makes his hopes rise to the stars.
An Entrepreneur According to Joseph Schumpeter
According to Joseph Schumpeter “Entrepreneur is one who innovates, raises money, assembles
inputs, chooses managers and sets the commercial organization going with his ability to identify
them and opportunities which others are not able to identify and is able to fulfil such economic
opportunities.”
Joseph A. Schumpeter states that : “The entrepreneur in an advanced economy is an individual
who introduces something new in the economy - a method of production not yet tested by
experience in the branch of manufacturer concerned, a product with which consumers are not yet
familiar, a new source of raw material or new markets.
………Continued
Key elements of an entrepreneur
Nascent Entrepreneurs
Moderate Risk Taker: Entrepreneurs are not wild risk takers but are instead calculating risk
takers. Unlike “high-rolling, riverboat” gamblers, entrepreneurs rarely gamble. Their goals may
appear to be high-even impossible-in others’ eyes, but entrepreneurs see the situation from a
different perspective and believe that their goals are realistic and attainable. They usually spot
opportunities in areas that reflect their knowledge, backgrounds, and experiences, which increase
their probability of success.
Skill for Organizing: A true entrepreneur is one who has the ability to mobilise resources in the
best possible manner for achieving the business objectives. Entrepreneurs know how to put the
right people together to accomplish a task. Effectively combining people and jobs enables
entrepreneurs to transform their vision into reality.
Goal Oriented: Entrepreneurs are highly goal-oriented and specifically aim at producing goods
and services that represent unmet needs of consumers. An entrepreneur must be able to set
realistic but challenging goals for him as well as for others in the organisation
…….Continued
Desire for Responsibility: Entrepreneurs feel a deep sense of personal responsibility for the
outcome of ventures they start. They prefer to be in control of their resources, and they use those
resources to achieve self-determined goals.
Emotional Stability and Self-control: Emotional health is a must for entrepreneurs to meet the
challenges of exploiting a new business opportunity. Successful entrepreneurs believe in control
being exercised from within. They believe in imposing control on themselves and their
enterprises rather than leaving their success to fate.
Communication Ability: This ability pertains to communicate effectively. As a leader an
entrepreneur communicates effectively with all concerned such as financiers, employees,
customers, suppliers, creditors and all who are concerned with the new enterprise.
Future Orientation: Entrepreneurs look ahead and are less concerned with what they did
yesterday than with what they might do tomorrow. Not satisfied to sit back and revel in their
success, real entrepreneurs stay focused on the future.
…..Continued
Commitment and Dedication: Entrepreneurs must work with dedication and commitment to
launch successful business enterprises. The commitment from the entrepreneur for longer period
may be 5 to 10 years is necessary for conceptualisation, building and running an enterprise.
Entrepreneurship is hard work, and launching a company successfully requires total commitment
from an entrepreneur.
High Level of Energy: Entrepreneurs are more energetic than the average person. Managing
resources and running an enterprise calls for long hours of work for longer period of time and
hence an entrepreneur is a man of high energy level.
Flexibility: One hallmark of true entrepreneurs is their ability to adapt to the changing demands
of their customers and their businesses. In this rapidly changing global economy, rigidity often
leads to failure.
Technical Knowledge: An entrepreneur must have a reasonable level of technical knowledge.
This is the one ability that most people are able to acquire if they try hard enough. The
entrepreneur should have a keen desire to change and adopt new industrial or commercial
technology available in the market.
………Continued
Mental Ability: An entrepreneur will be a man of high level intelligence, creative, thinking and
decision maker. He must be able to engage in the analysis of various problems and situations in
order to deal with them. The entrepreneur should anticipate changes and must be able to study the
various situations under which decision have to be made.
More than a Manager: An entrepreneur is more a true leader and less a manager. An
entrepreneur builds up his team, educates them, keeps high level of motivation and also provides
an environment for creative and focused to work culture. He is the leader of the team. He inspires
loyalty and hard work to raise productivity ad efficiency. He has the ability to become market
leader.
Problem Solver and a Decision Maker: In the initial phases of an enterprise many teething
problems do occur and an entrepreneur should be a creative problem solver to turn difficulties into
advantages. Entrepreneurs face lots of problems right from the conception of an idea to its
implementation. Entrepreneurs who are decisive arrive at the right solution to the problem by
spending the least possible time and money. Lack of ability to solve problems will result in most
of the problems remaining unresolved.
……...Continued
Desire for Immediate Feedback: Entrepreneurs enjoy the challenge of running a business, and
they like to know how they are doing and are constantly looking for feedback.
Human Relation Ability: Tactful and warm human relation is an important factor which brings
success to an entrepreneur. An entrepreneur who maintains good relations with customers,
employees, suppliers, creditors and the community is much more likely to succeed in his business
than the individual who does not invest in maintaining these relations.
….Continued
According to James J. Berne ( x-tics of an entrepreneur)
• He is an enterprising individual, is energetic, hardworking, resourceful, aware of new
opportunities and able to adjust himself to changing conditions with ease and willing to assume
risks involved in change.
• He is interested in advancing technologically and in improving the quality of his product or
service.
• He is interested in expanding the scale of his operations by reinvesting his earnings.
• He visualizes changes and adapts to changing conditions.
• He is a firm believer in planning and systematic work.
• He works for the society at large and for the good of his fe1low-beings.
…….Continued