Starting and operating a new business involve considerable risk and effort to overcome the inertia against creating something new. In creating and growing a new venture, the entrepreneur assumes the responsibilities and risks for its development, survival and enjoys the corresponding rewards. The fact is that consumers, business people, and government officials are interested in entrepreneurship.
According to D.C.McClelland entrepreneur and entrepreneurship are defined as follows: 'Entre-preneur' is a person who creates an enterprise and the process of creation is called as 'entrepreneur-ship'.
Entrepreneurship is doing things in a new and better way and decision-making under the condition of uncertainty.
The assumption of risk and responsibility in designing and implementing a business strategy or starting a business. -Encyclopedia Britannica
Entrepreneurship is the function of foreseeing investment and production opportunity, organizing an enterprise to undertake a new production process, raising capital, hiring labour, arranging for the supply of raw materials, and selecting managers for day-to-day operation of the enterprise.
A person who develops and owns his own enterprise
A moderate risk taker and works under uncertainty for achieving the goal
Reflects strong urge to be independent and innovative
Persistently tries to do something better
Dissatisfied with routine activities
Prepared to withstand the hard life.
Perceiving market opportunities
Gaining command over scarce resources
Managing human relations within firms
Marketing of the products
Responding to the competition
Dealing with bureaucracy
Upgrading process and product quality
Managing customer and supplier relations
Introducing new production techniques and products
Need for achievement
High need for power
Propensity to take risk
Determined but patient
Exhibits sense of leadership
Also exhibits sense of competitiveness
Takes personal responsibility
Oriented towards the future
Tends to persist in the face to adversity
Convert a situation into opportunity
Desire to work independently
Desire to branch out to manufacturing
Assistance from Government
Assistance from financial institution
Availability of technology/raw material
Desire for taking personal responsibility
Anticipation of future possibilities
According to McClelland:
An unusual creativeness
A propensity of risk taking
A strong need for achievement According to Prof. Tandon:
Capacity to assume risks
Technical Knowledge and willingness to change
Ability to marshal resources
Ability of organization and administration
There are five types of entrepreneurs
They are aggressive in experimentation and clever in putting attractive possibilities into practice.
Adoptive or Imitative Entrepreneurs:
They adopt best practices. Imitative entrepreneurs are revolutionary and important.
They display great caution and skepticism in experimenting with any change in their enterprise.
They are against any change in production method even at the cost of losses.
They become entrepreneurs on account of circumstances.
The Network of Entrepreneurship and Economic Development (NEED) brings together under-privileged communities with the teams of Social Entrepreneurs in order to maximize human resource potential and create positive change in their socio-economic and political environment.
This is achieved through:
Mainstreaming Gender Issues
Micro-Enterprise and Entrepreneurial Skills Development
Career driven focused Vocational Skill Training and upgradation.
Pro-poor driven advocacy for Intellectual Property Right (IPR) towards registering the indig-enous products through Geographical Indicators (GI) and economics governance.
Women's and Children's Health, including Water and Sanitation
Rural Asset Management, including Natural Resources
Capacity Building Development in Locally Specific Resource Groups
Networking Towards Grassroots Activism and Global Change
Service driven Micro-Finance supports to groups
1. The identification/recognition of market opportunity and the generation of a business idea (prod-uct or service) to address the opportunity.
2. The marshalling and commitment of resources in the face of risk to pursue the opportunity.
3. The creation of an operating business organization to implement the opportunity-motivated busi-ness idea.
Project Identification is a collection, compilation and analysis of data to locate potential opportu-nities for starting business and development of such opportunities. Opportunity is a business concept, which if turned into a tangible product or service, by the enterprise, will result into profit. It is all about creating values. The search of a good idea, generate your own idea and develop someone else's idea. Opportunities are identified through innovation/search of business ideas.
There are three types of innovation
Additive Innovation - Fully exploiting already existing resources, such as product lines extensions complementary.
Innovation - Offers something new and introduces a few changes in the structure of the business.
Breakthrough Innovation (Radical Innovation) - Changes the fundamentals of the business, creat-ing a new industry and new avenues for extensive wealth creation
It has long term consequences (make or break)
Involves commitment which can not be easily reversed
Ideas are put into action
Projects are catalytic agents for economic development
Involves creative use of resources- manpower, capital, raw materials etc.
Generates value addition and build-up national capital
Brings socio-cultural development
Leads to development of infra-structure and environment
Location of project
Technology to be used
Lack of a viable / feasible project idea
Lack of realistic/ achievable objectives
Lack of necessary resources / infrastructure to convert idea into reality
Policies of government / Legal restrictions
Lengthy and cumbersome procedures to get finance and start business
Feasibility Analysis (First stage in project formulation)
Techno-Economic Analysis (Screens the idea to- Estimate of potential of the demand for goods/ services)
Project Design and Network Analysis (The sequence of events of the project and it identifies project inputs, finance needed and cost-benefit profile of the project)
Input Analysis (Assesses the input requirements during the construction and operation of the project)
Financial Analysis (Involves estimating the project costs, operating cost and fund requirements)
Cost-Benefit Analysis (It considers costs that all entities have to bear and the benefit connected to it)
Pre-Investment Analysis (Helps the project-sponsoring body, the project-implementing body and the external consulting agencies to accept/reject the proposal)
Economic aspects - present market, scope for the growth, justification for investment
Technical aspects - technology, machinery, and equipment needed
Financial aspects - Total investment needed, entrepreneur's contribution, cost of capital and re-turn on capital
Production aspects - Product details, justification for the choice of product, export worthiness
Managerial aspects - Qualifications, experience of people needed for managerial posts
The project report is submitted to financial institutions for grant of land and other financial conces-sions. Organizations like Small Industries Service Institute (SISI) and Small Industries Development Organization (SIDO) help entrepreneurs to prepare project report. The financial institutions ascertain from the report, whether the project can generate enough funds to repay the borrowings in stipulated time frame.
Financial Management can be defined as the management of the finances of a business / organiza-tion in order to achieve financial objectives.
The key objectives of financial management would be to:
Create wealth for the business
Generate cash, and
Provide an adequate return on investment bearing in mind the risks that the business is taking and the resources invested.
Management needs to ensure that enough funding is available at the right time to meet the needs of the business. In the short term, funding may be needed to invest in equipment and stocks, pay employ-ees and fund sales made on credit. In the medium and long term, funding may be required for significant additions to the productive capacity of the business or to make acquisitions.
Financial control is a critically important activity to help the business ensure that the business is meeting its objectives.
The financial decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits further.
The budget is a part of the foundation upon which an organization justifies its mission.
It establishes financial parameters through which the organization can determine its objectives and attain its goals.
An estimation of revenue and expenses for a given period of time, usually 1-2 years.
Anticipate or predict cash flow as well as control cash flow.
Financial ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. In some cases, ratio analysis can predict future bankruptcy.
Bookkeeping is the recording of financial transactions. Transactions include sales, purchases, in-come, and payments by an individual or organization. Bookkeeping is usually performed by a book-keeper.
The following are steps to start a small scale industry
Description of the Business
The Marketing Plan
Pricing and Sales
Advertising and Public Relations
The Management Plan
The Financial Management Plan.
The business description section is divided into three primary sections. Section 1 actually de-scribes about business, Section 2 describes about the product or service and Section 3 the location of business, and why this location is desirable.
Try to describe the benefits of goods and services from your customers' perspective. Successful business owners know or at least have an idea of what their customers want or expect from them.
How will the product or service benefit the customer?
Which products/services are in demand? Will there be a steady flow of cash?
What makes the product/service different and desirable?
The location of the business can play a decisive role in its success or failure. The location should be built around the customers, it should be accessible and it should provide a sense of security.
Marketing plays a vital role in successful business ventures. How well they market the business, along with a few other considerations, will ultimately determine degree of the success or failure. The key element of a successful marketing plan is to know about customers-their likes, dislikes, and expec-tations.
Competition is a way of life. Nations compete for the consumer in the global marketplace, as do individual business owners. Advances in technology can send the profit margins of a successful business into a tailspin causing them to plummet overnight or within a few hours. When considering these and other factors, it can conclude that business is a highly competitive, volatile arena. Because of this volatility and competitiveness, it is important to know about competitors.
Pricing strategy is another marketing technique that can be used to improve overall competitive-ness. Get a feel for the pricing strategy the competitors are using. Determine prices in line with competi-tors in the market area and verify if they are in line with industry averages.
Some of the pricing strategies are:
Retail cost and pricing
Pricing below competition
Pricing above competition
Service costs, components and pricing (for service businesses only)
Advertising and promotion, however, is the lifeline of a business and should be treated as such. Devise a plan that uses advertising and networking as a means to promote business.
Managing a business requires more than just the desire to be one's own boss. It demands dedication, persistence, the ability to make decisions and the ability to manage both employees and finances.
Funding of capital projects
Developing new products and services
Retiring products and services
Selling assets, purchasing assets, protecting assets
Moving an organization to a new location
Quality control is a process by which entities review the quality of all factors involved in production. This approach places an emphasis on three aspects:
Elements such as controls, job management, defined and well managed processes, performance and integrity criteria, and identification of records
Competence, such as knowledge, skills, experience, and qualifications
Soft elements, such as personnel integrity, confidence, organizational culture, motivation, team spirit, and quality relationships.
In project management, quality control requires the project manager and the project team to inspect the accomplished work to ensure that it is aligned with the project scope. In practice, projects typically have a dedicated quality control team which focuses on this area. Quality control is a process employed to ensure a certain level of quality in a product or service. It may include whatever actions a business deems necessary to provide for the control and verification of certain characteristics of a product or service.
Entrepreneurs must understand all aspects of their business. They should have the knowledge and skills to buy the right supplies, keep complete financial records, and manage people in a way that they can be highly productive. Entrepreneurs need to project a professional image with well designed busi-ness cards and letterhead stationary. Many entrepreneurial opportunities exist that can be operated from a home, store, factory or warehouse. Small boutiques or specialized stores can be formed any-where there are consumers. Technology enables small business owners to keep in touch with both suppliers and customers.
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