Chapter One
What is Entrepreneurship?
Generally to express the desire to do something
after getting new ideas about something new
is called entrepreneurship.
 It is the process of creating something new with
value by devoting the necessary time and effort,
assuming the accompanying financial, psychic and
social risks, and receiving the resulting rewards of
monetary and personal satisfaction and
independence.
What is Entrepreneurship?
According to Webster Dictionary, “Organize the
economical organizations and the ability of taking
risk is called entrepreneurship."
According to Basu and Moulik, "Entrepreneurship
means –
a. To employ economic opportunities properly;
b. To establish institutions; and
c. To make the institution profitable by maintaining it
effectively."
.
What is Entrepreneurship?
 In final it can be said that, to establish a new
institution, new invention in the establishment, taking
the risk and the desire and power to take steps to
maintain the institution is called entrepreneurship
Definition of Entrepreneur
 The term entrepreneur has derived from the French word
Entreprendre that means to take the responsibility or initiative
of doing something. In 17th century the word entrepreneur was
used to mean the architects and contractors of the Public
Works. In 16th century someone who successful did something
in the field of military service was called an entrepreneur. At the
end of 18th century Oxford Dictionary defined an entrepreneur
who worked as a director in a music institution. After that
century the term began to change and started to use in the field
of economy.
Definition of Entrepreneur
An entrepreneur is s/he who utilizes capital, labor and
other wealth is such a way that their price and
importance increase than before.
Jean Baptist says, "An entrepreneur is the most
important agent of production who provides
continuing management and brings together the
factors of production. S/he must have judgments,
perseverance, the knowledge of the world as well as
that of business."
Is Entrepreneur a manager?
 An entrepreneur is such a person who takes initiatives
to do something new which adds new dimension to
society. A manager is such a person who is involved
with supervising all daily activities of an institution.
The differences between managers and entrepreneurs
are given below:
Manager vs. Entrepreneur
Topics of Difference
Manager
1.Times consideration:
1.Managers want to do
1. S/he works for long
everything immediately.
time. S/he makes
S/he uses daily, weekly,
policies to achieve
monthly, and yearly
growth for the year
reports to evaluate results
three to ten.
of works.
2. S/he does not depend
2. S/he depends on others
on others and wants
and applies power on
to succeed depending
others.
on themselves.
2.Enforce of power on
others:
Entrepreneur
Topics of Difference
Manager
3. Risk:
3. S/he takes less risk.
S/he is somehow a
conservative and wants
development of
organization.
4. Structure:
5. Thought
Entrepreneur
3. S/he adopt medium
type risk. S/he evaluates
risk and take the
opportunity of getting
more profit.
4. S/he always believes in
4. S/he depends on
the improvement of
organization structure
structure. S/he
s/he conducts activities
determines structure by
on the basis of formal and adjusting structure with
line structure.
environment.
5. Their through are
5. Their thought are
relative or unlimited,
specific or limited in
more tolerant and works
scope less to learnt, and
with uncertainly. They are
them works with security creative and imaginative
Topics of Difference
6. Communication:
7. Managerial Efficiency:
8.Activities:
Manager
Entrepreneur
6. S/he likes one faced
communication in most
cases. S/he wants favorable
reply.
6. S/he communicates in
the double faced way. S/he
is ready for both favorable
and adverse reaction.
7. His managerial
efficiency is very high.
They used to having formal
management training.
7. Their managerial
efficiency is low. They are
generally expert in complex
or technical
aspect of business.
8. Them communication or
relation is existent in
8. They are to take decision
different levels of the whole relating to all activities of
organization.
the institution. omplex or
technical
Four Aspects of an Entrepreneur
 I) Creating something new of value
 2) Devotion of time and effort
 3) Assuming the Necessary risks
 4) Rewards of being an entrepreneur: independence,
personal satisfaction, money
The Entrepreneurial Decision Process
 1.1 to 1.9 million new companies formed each year.
 Despite recession, inflation, high interest rate, lack
of infrastructure, economic uncertainty, and high
probability of failure.
 Entrepreneurial decision process entails a
movement from a present lifestyle to forming a
new enterprise.
Decisions for a Potential Entrepreneur
Form new enterprise
Change from
present lifestyle
Desirable
Work environment
2. Sub-cultural
Disruption
3. Family
1. Cultural
4. Teachers
5. Peers
Possible
1. Government
2. Background
3. Marketing
4. Financing
5. Role models
Change from Present Lifestyle: Work
Environment
 Research & Development: individuals develop new
product ideas and processes and often leave to form
their own companies.
 Marketing: individuals have become familiar with the
market and customer’s unfilled need, and leave to start
new business to fill these needs.
Change from Present Lifestyle: Disruption
 Companies are formed by people who have retired,
relocated or fired.
 Completion of educational degree is another form of
disruption ( not receiving the desired promotion after
completion of MBA degree).
Form New Enterprise
 The decision to start a new business occurs when an
individual perceives it both desirable and possible.
Desirability of New Venture Formation:
Culture
 A culture that values entrepreneurship
 American culture places high value on being one’s
boss, having individual opportunities, being a
success and making money-all aspects of
entrepreneurship.
 Some cultures do not value new businesses highly
and failure is disgraceful.
Desirability of New Venture Formation: Subculture
 Many subcultures that shape value systems operate
within cultures.
 Pockets of entrepreneurial sub-cultures within USA:
Route 128 (Boston), Silicon Valley (California),
Cleveland, Austin.
 These subcultures support and promote
entrepreneurship as the best occupation.
Desirability of New Venture Formation:
Family
 Founders of many companies had parents who valued
independence.
 Independence achieved by company owners,
professionals, artists, professors, or farmers permeates
their family life.
Desirability of New Venture Formation:
Teachers
 Teachers can influence individuals to regard
entrepreneurship as desirable and viable career
path.
 The number of entrepreneurship courses a person
takes increases the probability of starting a
venture.
 MIT and Harvard are located near Route 128,
Stanford in Silicon Valley facilitates
entrepreneurship.
 An areas having a strong education base is strong
support factor for entrepreneurial activity.
Desirability of New Venture Formation:
Peers
 Entrepreneurial pool and meetings where people can
discuss ideas, problems, and solutions spawns more
new companies.
Possibility of New Venture Formation: Govt.
 The government contributes by providing
infrastructure to help and support a new venture.
 Roads, communication and transportation systems,
utilities, and economic stability.
 Tax rate.
Possibility of New Venture Formation:
Background
 Formal education and previous business experience.
 Individuals will be more successful in forming
businesses in fields where they have worked.
Possibility of New Venture Formation:
Marketing
 Presence of sufficient market size is not enough to
succeed, marketing know-how matters.
 Putting together the best total package of product,
price, distribution and promotion.
 Companies are more easily formed when driving
force is more from the market demand than a
technology push.
Possibility of New Venture Formation: Role
Models
 Seeing someone else succeed makes it easier to picture
oneself in similar activity.
 “ If that person can do it, so can I”
Possibility of New Venture Formation:
Financial Resources
 Start up money for a new company comes from
personal savings, credit, friends, and relatives.
 Risk capital availability plays a role in growth of
entrepreneurial activity.
Types of Start-Ups
 Lifestyle Firm: A small venture that supports the
owners and usually does not grow.
 Foundation Company: A type of company formed
from research and development that usually does
not go public.
 High-potential venture: A venture that has high
growth potential and therefore receives great
investor interest.
Role of Entrepreneurship in Economic
Development
 Increasing per capita output and income.
 Involves initiating and constituting change in the structure of
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business and society.
This change is accompanied by growth and increased output,
which allows for more wealth to be divided by the various
participants.
Innovations stimulate investment interest in the new venture.
This new investment works on both the demand and the
supply side of the growth equation.
The new capital created expands the capacity for growth
(supply side), and the resultant new spending utilizes the new
capacity and output (demand side).
Intrapreneurship vs. Entrepreneurship
 Intrapreneurship is entrepreneurship within an
existing business culture.
 Existing businesses have the financial resources,
business skills, and the marketing and distribution
systems to commercialization innovation
successfully.
 However, bureaucracy, focus on short term profits
and highly structured organization inhibit
creativity and prevent new products from
development.
Intrapreneurship vs. Entrepreneurship
 Entrepreneurship bridges the gap between innovation
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and marketplace.
Entrepreneurs may lack managerial skills, marketing
capability or financial resources.
Their inventions are often unrealistic, requiring significant
modifications to be marketable.
They also do not know how to interface with the necessary
entities: banks, suppliers, customers, venture capitalists,
distributors, and advertising agencies.
Yet, entrepreneurship is presently the most effective
method for bringing new products and services to the
market place.
The Drawbacks of Entrepreneurship:
 Uncertainty of Income
 Risk of losing your entire Investment
 Long Hours and Hard Work
 Lower Quality of Life until the business
get established
 High level of stress
 Complete Responsibility
Ten Deadly Mistakes of Entrepreneurship:
 Business entrepreneurship fail because:-
Management Mistakes
 Lack of Experience
 Poor financial control
 Weak marketing efforts
 Failure to develop a strategic and effective
plan

Uncontrolled Growth
 Poor location
 Improper inventory control
 Incorrect or unsuitable pricing
 The inability of to move into
entrepreneurial thinking mindset
from the previous secured permanent
managerial position held.
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How to avoid failure in a Entrepreneurial
business?
 Know your business in depth.
 Develop a good, effective and solid Business Plan.
 Manage your financial resources effectively.
 Have a thorough and complete financial statement.
 Learn hire and manage people effectively.
 Keep physically fit, consume healthy foods, and avoid
addictive consumption cigarettes and alcohol.