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."

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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 EntrepreneurThe 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 EntrepreneurAn 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 Entrepreneur

1.Times consideration:

2.Enforce of power on others:

1.Managers want to do everything immediately. S/he uses daily, weekly, monthly, and yearly reports to evaluate results of works.

2. S/he depends on others and applies power on others.

1. S/he works for long time. S/he makes policies to achieve growth for the year three to ten.

2. S/he does not

depend on others and wants to succeed depending on themselves.

Topics of Difference

Manager Entrepreneur

3. Risk:    4. Structure:     5. Thought  

3. S/he takes less risk. S/he is somehow a conservative and wants development of organization.  4. S/he depends on organization structure s/he conducts activities on the basis of formal and line structure.  5. Their thought are specific or limited in scope less to learnt, and them works with security

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 the improvement of structure. S/he determines structure by adjusting structure with environment. 5. Their through are relative or unlimited, more tolerant and works with uncertainly. They are creative and imaginative

Topics of Difference Manager Entrepreneur

 6. Communication:     7. Managerial Efficiency:

8.Activities:

6. S/he likes one faced communication in most cases. S/he wants favorable reply.  7. His managerial efficiency is very high. They used to having formal management training.

8. Them communication or relation is existent in different levels of the whole organization.

6. S/he communicates in the double faced way. S/he is ready for both favorable and adverse reaction.  7. Their managerial efficiency is low. They are generally expert in complex or technical aspect of business.  8. They are to take decision relating to all activities of the institution. omplex or technical

Four Aspects of an EntrepreneurI) Creating something new of value2) Devotion of time and effort3) Assuming the Necessary risks4) Rewards of being an entrepreneur:

independence, personal satisfaction, money

The Entrepreneurial Decision Process1.1 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

Desirable

1. Cultural

2. Sub-cultural

3. Family

4. Teachers

5. Peers

Possible

1. Government

2. Background

3. Marketing

4. Financing

5. Role models

Change from present lifestyle

Work environment

Disruption

Change from Present Lifestyle: Work EnvironmentResearch & 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: DisruptionCompanies 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 EnterpriseThe decision to start a new business occurs

when an individual perceives it both desirable and possible.

Desirability of New Venture Formation: CultureA culture that values entrepreneurshipAmerican 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: Sub-cultureMany 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: FamilyFounders 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: TeachersTeachers 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: PeersEntrepreneurial 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: BackgroundFormal education and previous business

experience.Individuals will be more successful in forming

businesses in fields where they have worked.

Possibility of New Venture Formation: MarketingPresence 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 ModelsSeeing 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 ResourcesStart 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-UpsLifestyle 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 DevelopmentIncreasing per capita output and income.Involves initiating and constituting change in the

structure of 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. EntrepreneurshipIntrapreneurship 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. EntrepreneurshipEntrepreneurship bridges the gap between

innovation 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 IncomeRisk of losing your entire

InvestmentLong Hours and Hard WorkLower Quality of Life until the

business get establishedHigh level of stressComplete Responsibility

Ten Deadly Mistakes of Entrepreneurship:

Business entrepreneurship fail because:-Management MistakesLack of Experience Poor financial controlWeak marketing effortsFailure to develop a strategic and effective plan

Uncontrolled GrowthPoor location Improper inventory controlIncorrect or unsuitable pricingThe inability of to move into entrepreneurial thinking mindsetfrom the previous secured permanent managerial position held.

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.