ENTREPRENEURSHIP

& SMALL BUSINESS

DEVELOPMENT
(MS 207)
UNIT I

SYLLABUS
Unit I
Entrepreneurship: Concept and Definitions; Entrepreneurship and Economic Development;
Classification and Types of Entrepreneurs; Entrepreneurial Competencies; Factor Affecting
Entrepreneurial Growth Economic, Non-Economic Factors; EDP Programmes; Entrepreneurial
Training; Traits/ Qualities of an Entrepreneurs; Entrepreneur; Manager Vs. Entrepreneur.
(14 Hours)
Unit II
Opportunity / Identification and Product Selection: Entrepreneurial Opportunity Search and
Identification; Criteria to Select a Product; Conducting Feasibility Studies; Project Finalization; Sources
of Information. (14 Hours)
Unit III
Small Enterprises and Enterprise Launching Formalities : Definition of Small Scale; Rationale;
Objective; Scope; Role of SME in Economic Development of India; SME; Registration; NOC from
Pollution Board; Machinery and Equipment Selection; Project Report Preparation; Specimen of Project
Report; Project Planning and Scheduling using Networking Techniques of PERT / CPM; Methods of
Project Appraisal.
(14 Hours)
Unit IV
Role of Support Institutions and Management of Small Business : Director of Industries; DIC;
SIDO; SIDBI; Small Industries Development Corporation (SIDC); SISI; NSIC; NISBUED; State
Financial Corporation SFC; Marketing Management; Production Management; Finance Management;
Human Resource Management; Export Marketing; Case Studies-At least 4 (four) in whole course.
(14 Hours)

UNIT I
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ENTREPRENEURSHIP: CONCEPT
AND DEFINITIONS

Entrepreneurship is the act of being an entrepreneur.

French word Entrependre and German word uternehmen
both referring to individuals who undertakes an endeavor.
Hence, anyone who exhibits the characteristics of selfdevelopment, creativity, self-decision making and risk taking.
According to oxford dictionary Entrepreneur is one who
organizes and manages enterprise involving high risk. But
researches indicates that entrepreneurs need not necessarily
be high risk takers, however, they reduce risk and increase
likelihood of success.

ENTREPRENEURSHIP: CONCEPT
AND DEFINITIONS

An Economist defines an entrepreneur as one who brings

resources, labour, material and other assets in to
combinations that make their value greater than before and
also one who introduces changes, innovations and a new
order.
A Psychologist defines an entrepreneur as a person who is
typically driven by a psychological force, which create a
desire to obtain or attain something.
As per sociologist a person whose actions would determine
social status & contribute to societal dev.
As per Management expert a person who has a vision and
generates action plan to achieve it.

ENTREPRENEURSHIP AND
ECONOMIC DEVELOPMENT

Entrepreneurs occupy a central position in a market

economy. Its the entrepreneurs who serve as the spark plug
in the economys engine, activating and stimulating all
economic activity.
The economic success of the nations worldwide is the result
of encouraging and rewarding the entrepreneurial instinct.
Entrepreneurs seek disequilibrium- a gap between the wants
and needs of customers and the products and services that
are currently available.
The entrepreneur then brings together the factors of
production necessary to produce, offer and sell desired
products and services.
They invest and risk their money- and other peoples moneyto produce a product or service that can be sold at a profit.
6

ENTREPRENEURSHIP AND
ECONOMIC DEVELOPMENT

An increase in the number of entrepreneurs leads to an

increase in economic growth. This effect is a result of a
concrete expression of their skills, and more precisely, their
propensity to innovate. This can be termed as the carrying
out of new combinations by distinguishing five cases:
1. The introduction of a new product- that is one with which
consumers are not yet familiar- or of a new quality of a
product.
2. The introduction of a new method of production, that is
one not yet tested by experience in the branch of
manufacture concerned, which need by no means be founded
upon a discovery scientifically new, and can also exist in a
new way of handling a commodity commercially.

ENTREPRENEURSHIP AND
ECONOMIC DEVELOPMENT

3. The opening of a new market, that is a market into which

the particular branch of manufacture of the country in
question has not previously entered, whether or not this
market has existed before.
4. The conquest of a new source of supply of raw materials or
half manufactured goods, again irrespective of whether this
source already exists or whether it has first to be created.
5. The carrying out of the new organisation of any industry,
like the creation of a monopoly position or the breaking up of
a monopoly position.

ENTREPRENEURSHIP AND
ECONOMIC DEVELOPMENT

Through his innovative activity, entrepreneur seeks to create

new profit opportunities.
These opportunities can result from productivity increases, in
which case, their relationship to economic growth appears
quite clearly.
Moreover, the disequilibrium created by the entrepreneur can
be encouraging for additional innovations and profit
opportunities.
Therefore, more entrepreneurs means more growth, which in
turn leads to more entrepreneurs.

ENTREPRENEURSHIP AND
ECONOMIC DEVELOPMENT
In a nut shell:
Entrepreneur sets up business for transformation of resources
into products and services and meet the needs of the people.
Business activity involves production- manufacturing,
retailing, mining and services- create employment
opportunities.
Business creates wealth. Wealth results in a countrys
economic growth.
Entrepreneurship, especially among women in developing
countries seem to offer an improvement in the standard of
living as well as a path out of poverty.

10

CLASSIFICATION AND TYPES OF

ENTREPRENEURS

Entrepreneurs are broadly classified according to the types of business,

use of profession skills, motivation, growth and stage of development.
1. According to timing of venture creations:
a)

Early Starters

Start venture with little or no full-time work experience

Often from family business

Suhas Gopinath started his company Gopals Inc. at the age of 14, in
USA as Indian laws do not permit a minor to run a company.

b.

Experienced

Spent a few yrs in family business or a large company.

Usually, the venture is related to the same business as previously

engaged in.

Narayan Murthy together with his like minded professionals started

Infosys at the age of 35 years

11

CLASSIFICATION AND TYPES OF

ENTREPRENEURS

c.

Mature

))

Very senior professionals, some at the level of CEO

))

Very high confidence and desire to do things in a way that may not
be totally acceptable to their earstwhile employers.

))

Ashok Soota and Subroto Bagchi quit Wipro to start Mindtree.

))

BVR Subbu, ex-CEO of Hyundai India, started a venture that brought

the plant of Daewoo in India.

2. According to type of business:

a)

Business Entrepreneurs :

))

Conceive an idea for a new product/service and then create

business to materialise idea in reality.

))

Tap both production and material resources to develop new

business opportunity.

))

Often small business entrepreneurs with small business units eg.

Printing press, advertising agency, textile processing house,
readymade garments or confectionary.
12

CLASSIFICATION AND TYPES OF

ENTREPRENEURS

b.

Trading Entrepreneur

))

Trading Activities not manufacturing work

))

Identifies potential markets, stimulates demand and creates

interest and demand among buyers to go in for his product.

))

Can be engaged in both domestic &overseas trade.

))

Whole sale trade, retail trade, Mall trading, exporters, importers,

stock trading, real estate.

c.

Industrial Entrepreneur

))

Ability to convert economic resources and technology into

profitable venture

))

Essentially a manufacturer, identifies potential needs and starts

industrial units for new products.

13

CLASSIFICATION AND TYPES OF

ENTREPRENEURS

d.

Corporate Entrepreneur

))

Individual who plans, develops & manages a corporate body.

))

Corporate body is a form of business organisation, one body of

many individuals, large corporations, which are registered as
separate legal entity under some statute or act eg. Company
registered under companies act, or trust under trust act.

e.

Agricultural entrepreneur

))

Agricultural activities such as raising & marketing of crops,

fertilizers and other inputs of agriculture.

))

Motivated to raise the productivity through mechanization and

technology.

))

Plantation, horticulture, dairy, forestry, floriculture, animal

husbandry, poultry, seeds.

14

CLASSIFICATION AND TYPES OF

ENTREPRENEURS

3. According to use of technology:

a.

Technical Entrepreneur

))

Essentially an entrepreneur of craftsman type, develops high

quality goods due to craftsmanship.

))

Concentrates more on production than marketing.

))

Introduction techniques, innovations for production.

b.

Non-technical Entrepreneur

))

Not concerned with technical aspect of production, but developing

alternative distribution strategies to promote their business.

c.

Professional Entrepreneur

))

Interested in establishing a business but does not have interest in

managing or operating once it established.

))

Professional entrepreneur sells out running business and starts

another venture with the sales proceeds.

))

Such an Entrepreneur is dynamic who conceives new ideas to

develop new projects.
15

CLASSIFICATION AND TYPES OF

ENTREPRENEURS
4. According to Motivation
a.

Pure Entrepreneur

))

Motivated by psychological and economic rewards.

))

Undertakes entrepreneurial activities for personal; satisfaction in work, ego

or status.

b.

Induced Entrepreneur

))

Induced to take entrepreneurship due to policy measures of the govt that

provides assistance, incentives, concessions and overhead facilities to start
ventures.

c.

Motivated Entrepreneur

))

Desire for self-fulfillment is the motivation

))

Making and marketing new products for consumers

))

If successful, further motivated by reward in term of profit.

d.

Spontaneous Entrepreneurs

))

Start business out of their natural talents

))

Initiative, boldness and confidence as motivation

))

Strong conviction and confidence in their ability.

16

CLASSIFICATION AND TYPES OF

ENTREPRENEURS
5. According to Growth
a.

Growth Entrepreneur

))

Takes up a high growth industry

))

Chooses an industry which has sustained growth prospects.

b.

Super-Growth Entrepreneur

))

Those entrepreneur who have shown enormous growth of performance in

their venture.

))

The growth performance is identified by the profitability and liquidity of

funds.

6. According to stage of development

a.

First-generation Entrepreneur

))

One who starts not from family business

))

Innovator, combining different skills and technologies to produce marketable

products or service.

b.

Modern Entrepreneur

))

One who undertakes those ventures which go well along with changing
demand and suit in the current marketing needs.
17

CLASSIFICATION AND TYPES OF

ENTREPRENEURS
Classical Entrepreneur

c.
))

Concerned with customer and marketing needs through the development of

self-supporting ventures.

))

Stereotype who aims to maximize economic returns at a consistent level

with the survival of the firm with or without the element of the growth.

7. Classification based on Socio-cultural Variables

a.

Entrepreneurs from business family

))

Few socio-cultural groups have dominated business scene in India,

prominently , Marwadi, Gugrati, Parsee, Sindhi communities. Tatas, Birlas,
Wadias and Singhanias are all from business community.

))

Entrepreneurship is easier for someone from business family or business

community as having solid support structure.

a.

Women entrepreneurs

Progressive laws & incentives have boosted women presence in

entrepreneurial activities in diverse fields.

))

Kiran Majumdar Shaw founded Biocon, which is now a leading Biotech firm in
India.
18

CLASSIFICATION AND TYPES OF

ENTREPRENEURS
Social Entrepreneurs

c.
))

As per Ashoka Innovators, a global non-profit organization, a social

entrepreneur is one who recognizes the part of society which is stuck and
provides new ways to get it unstuck.- child upliftment, environment, women
empowerment, blind, social unprivileged.

))

Verghese kurien of Amul, Rippan Kapur of CRY, Jeroo Billimoria of

childline(toll free help)

8. Other Categories:
a.

Innovative Entrepreneurs

))

Aggressive assemblage of information and analysis of results from

combination of factors.

))

Aggressive in experimentations and one who see and explore opportunity.

b.

Adoptive or Imitating Entrepreneurs

))

Readiness to adopt successful innovation.

))

Follow innovators,imitate techniq & technologies.

c.

Fabian Entrepreneurs

))

Great caution and scepticism in practicing change.

))

Shy & lazy, no will to introduce change or new method.

19

CLASSIFICATION AND TYPES OF

ENTREPRENEURS
Drone Entrepreneurs

d.
))

Refusal to adopt and use new opportunities to make changes in production

methods.

))

Traditional ways, products losses its marketability and operations becomes

uneconomical.

e.

Aspiring Entrepreneurs

))

Have dream of starting a business, yet not made the leap from their current
employment into the uncertainty of a startup.

))

Lifestyle Entrepreneurs

))

Develop an enterprise that fits their individual circumstances and style.

))

Basic intention is to earn an income for themselves & their families.

g.

Mompreneurs

))

Homemaker entrepreneur

20

CLASSIFICATION AND TYPES OF

ENTREPRENEURS
IT Entrepreneurs

)
)

DBMS, WWW, hotmail, kundli, portals, KIOSKs.

i.

Person within large corporations who takes direct resp -onsibility for turning
an idea into profitable finished products through innovations & assertive risk
taking

Entrepreneurs - intra+entrepreneur

21

ENTREPRENEURIAL
COMPETENCIES
An entrepreneurial competence is an underlying characteristic of a
person, which results in effective and /or superior performance in a
business venture.
It is an underlying characteristics of a person, in that it may be motive,
traits, skills ,aspect of ones self-image, a body of knowledge, set of skills
and cluster of appropriate motives/ traits that an individual possess to
perform in his business.
Personal Entrepreneurial Competencies - The EMPRETEC Model

Research by McClelland and McBer, funded by USAID, has identified 14

personal entrepreneurial competencies (PECs) which appear to
characterize the behaviour of successful entrepreneurs. The study,
conducted in India, Ecuador and Malawi, also found that these PECs
transcended culture, country and continent.

These competencies can be grouped into 3 main clusters and the

EMPRETEC model has merged some of these competencies to derive 10
PECs.
22

ENTREPRENEURIAL
COMPETENCIES
Achievement Cluster
1.Opportunity Seeking and Initiative
-Does things before asked or forced to by events
-Acts to extend the business into new areas, products or services
-Seizes unusual opportunities to start a new business, obtain
financing, equipment, land work space or assistance
2.Risk Taking
-Deliberately calculates risks and evaluates alternatives
-Takes action to reduce risks or control outcomes
-Places self in situations involving a challenge or moderate risk
3.Demand for Efficiency and Quality
-Finds ways to do things better, faster, or cheaper
-Acts to do things that meet or exceed standards of excellence
-Develops or uses procedures to ensure work is completed on time
or that work meets agreed upon standards of quality
23

ENTREPRENEURIAL
COMPETENCIES
4.Persistence
-Takes action in the face of a significant obstacle
-Takes repeated actions or switches to an alternative strategy to
meet a challenge or overcome an obstacle
-Takes personal responsibility for the performance necessary to
achieve goals and objectives
5.Commitment to the Work Contract
-Makes a personal sacrifice or expends extraordinary effort to
complete a job
-Pitches in with workers or in their place to get a job done
-Strives to keep customers satisfied and places long term good will
over short term gain

24

ENTREPRENEURIAL
COMPETENCIES
Planning Cluster
6.Information Seeking
-Personally seeks information from clients, suppliers or competitors
-Does personal research on how to provide a product or service
-Consults experts for business or technical advice
7.Goal setting
-Sets goals and objectives that are personally meaningful and
challenging
-Articulates clear and specific long range goals
-Sets measurable short term objectives
8.Systematic Planning and Monitoring
-Plans by breaking large tasks down into time-constrained sub-tasks
-Revises plans in light of feedback on performance or changing
circumstances
-Keeps financial records and uses them to make business decisions
25

ENTREPRENEURIAL
COMPETENCIES
Power Cluster
9.Persuasion and Networking
-Uses deliberate strategies to influence or persuade others
-Uses key people as agents to accomplish own objectives
-Acts to develop and maintain business contracts
10.Independence and self-confidence
-Seeks autonomy from the rules or control of others
-Sticks with own judgement in the face of opposition or early lack
of success
-Expresses confidence in own ability to complete a difficult task or
meet a challenge

26

FACTORS AFFECTING
ENTREPRENEURIAL GROWTH
1. ECONOMIC FACTORS
a) Lack of adequate overheadfacilities:
Profitable innovations require basic facilities like transportation,
communication, power supply etc. They reduce cost ofproduction and
increase profit.
b) Non availability of capital
Inventions are capital oriented. In less developed countries mostcapital
equipment have to be imported which involves foreign exchange which
acts asa difficult problem.
c) Great risk
Risk is high in case of less developed countries as there is lack of reliable
information, markets for good and services is small etc.
d) Non availability of labor and skills
Though there is abundant labor supply there isgenerally scarcity of skills
at all levels.
27

FACTORS AFFECTING
ENTREPRENEURIAL GROWTH
2. SOCIAL FACTORS
A society that is rational indecision making would be favorable for
decision making. Education, research and training is given
lessimportance in less developed countries therefore there is very little
verticalmobility of labor.
3. CULTURAL FACTORS
Religious, social and cultural factors also influence the individual taking
up an entrepreneurial career, in some countries there is religious and
culturalbelief that high profit is unethical. This type of belief inhibits
growth ofentrepreneurship.
4. PERSONALITY FACTORS
In less developed countries the entrepreneur islooked upon with
suspicion. Public opinion in the less developed nations sees in
theentrepreneur only a profit maker and exploited.

28

FACTORS AFFECTING
ENTREPRENEURIAL GROWTH
5. MOTIVATING FACTORS
Motivation is the act of stimulating someone oroneself to get a desired
course ofaction, to push the right button to getthe desired results. Some
of these are:
1.Educationbackground
2.Occupationalexperience
3.Familybackground
4.Desire to work independently in manufacturing line
5.Assistancefromfinancialinstitution
6.Availabilityof technology
7.Other factors

29

ENTREPRENEURSHIP
DEVELOPMENT PROGRAMMES
Since 1950, a substantial volume of study has gone into
the facets of entrepreneur development in India.
It is possible to identify the individuals in all
communities with entrepreneurial talent, to motivate
and train them through properly organized
programmes.
The EDP thus became a new concept for harnessing the
vast untapped human resources.
It strikes a welcome note in respect of change in
perception and in recognition of critical role the
entrepreneurs play in industrial development by
creating potential avenues for self development.
30

ENTREPRENEURSHIP
DEVELOPMENT PROGRAMMES
Entrepreneurship Development Program covers the
entire venture creation process, from idea generation
to building viable global businesses, with special
emphasis on the nurturing roles of corporations,
universities, governments and foundations.
Using entrepreneurial culture as a model, participants
learn what they need to know in order to develop ideas
into successful businesses and to increase
entrepreneurial opportunities in their corporations,
institutions and regions.

31

ENTREPRENEURSHIP
DEVELOPMENT PROGRAMMES
Features Of EDP:
Identification and careful selection of entrepreneurs
for training
Developing the entrepreneurial capabilities of the
trainee
Equipping the trainee with basic managerial
understanding
Helping him/her to secure necessary financial
infrastructural and related assistance

32

ENTREPRENEURSHIP
DEVELOPMENT PROGRAMMES
Objectives Of EDP:
To identify the potential entrepreneurs
To develop necessary knowledge and skills among the
participants
To understand the process and procedure of setting
up of small business
To train the entrepreneurs to entrepreneurs to
understand environmental threats and opportunities
To provide help in identification and formulation of
viable projects
To impart training in managerial understanding and
skills
33

ENTREPRENEURSHIP
DEVELOPMENT PROGRAMMES
Objectives Of EDP:
To provide post training assistance and monitoring
facilities
Relevance of EDP:
For rapid industrial development
To remove or reduce regional industrial imbalance
A vehicle for social economic revolution

34

ENTREPRENEURIAL TRAINING
Peter F. Drucker (1985):
The entrepreneurial mystique? Its not magic. Its
not mysterious, and it has nothing to do with the
genes
Its a discipline
And, like any discipline, it can be learned
Objectives:
To provide factual information
To give good examples
To provide policy recommendations

35

ENTREPRENEURIAL TRAINING
Characteristics of training of Entrepreneurs
Entrepreneurial:
Training in, learning
Personal competences
Flexible, adaptable
Student oriented
Group interaction
Clash room, diversity
Coaching
Project, across disciplines
Close to business
Action oriented

Traditional:
(Education about)
(Qualifications in disciplines)
(Fixed study plan)
(Teacher oriented)
(Class)
(Classroom)
(Lecturing)
(Topic, disciplines)
(Close to research, academia)
(Study, theory oriented)

36

TRAITS/QUALITIES OF AN
ENTREPRENEUR
John Hornday of Bobson College has developed a composite list of
entrepreneurial traits:
1.

Self Confidence and optimism

2.

Positive response to challenges

3.

Ability to take calculated risk

4.

Flexibility and ability to adapt

5.

Knowledge of markets

6.

Ability to get along with others better

7.

Independent mindedness

8.

Versatile knowledge

9.

Energy and efficiency

10.

Creativity, need to achieve

11.

Dynamic leadership

12.

Response to suggestions
37

TRAITS/QUALITIES OF AN
ENTREPRENEUR
John Hornday of Bobson College has developed a composite list of
entrepreneurial traits:
13. Take initiatives
14. Resourceful and persevering
15. Perceptive and foresight
16. Response to criticism

38

MANAGER VS. ENTREPRENEUR

The terms manager and entrepreneur have different approaches in:
1.
Motive: The motive of an entrepreneur is to start a venture by
setting up an enterprise. He understands the venture for his personal
gratification but the main motive of a manager is to render his
services in an enterprise already setup by someone else.
2.
Status: An entrepreneur is the owner of the enterprise whereas a
manager is an employee
3.
Risk Bearing: An entrepreneur being the owner of the enterprise
assumes all risks and uncertainty involved in running the enterprise
whereas a manager does not bear any risk
4.
Objective: Entrepreneurs objective is to innovate and create and he
acts as a change agent whereas a managers objective is to supervise
and create routines and to implement the entrepreneurs plans and
ideas
5.
Rewards: The reward of an entrepreneur is the profit which is highly
uncertain whereas the manager gets a salary as the reward for his
service which is fixed and certain
39