Module I:

Introduction: concept of entrepreneur

An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the
rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or
procedures.

Entrepreneurs play a key role in any economy, using the skills and initiative necessary to anticipate needs and bring
good new ideas to market. Entrepreneurs who prove to be successful in taking on the risks of a startup are rewarded
with profits, fame, and continued growth opportunities. Those who fail, suffer losses and become less prevalent in the
markets.

Key Takeaways

 A person who undertakes the risk of starting a new business venture is called and entrepreneur.
 An entrepreneur creates a firm, which aggregates capital and labor in order to produce goods or services for
profit.
 Entrepreneurship is an important driver of economic growth and innovation.
 Entrepreneurship is high-risk, but also can be high-reward as it serves to generate economic wealth, growth,
and innovation.
  

Concept of Entrepreneurship:

The word “entrepreneur” is derived from the French verb enterprendre, which means ‘to undertake’. This refers to
those who “undertake” the risk of new enterprises. An enterprise is created by an entrepreneur. The process of
creation is called “entrepreneurship”.

Entrepreneurship is a process of actions of an entrepreneur who is a person always in search of something new and
exploits such ideas into gainful opportunities by accepting the risk and uncertainty with the enterprise.

Characteristics of Entrepreneurship:

Entrepreneurship is characterized by the following features:

1. Economic and dynamic activity:

Entrepreneurship is an economic activity because it involves the creation and operation of an enterprise with a view to
creating value or wealth by ensuring optimum utilisation of scarce resources. Since this value creation activity is performed
continuously in the midst of uncertain business environment, therefore, entrepreneurship is regarded as a dynamic force.

2. Related to innovation:

Entrepreneurship involves a continuous search for new ideas. Entrepreneurship compels an individual to continuously
evaluate the existing modes of business operations so that more efficient and effective systems can be evolved and
adopted. In other words, entrepreneurship is a continuous effort for synergy (optimization of performance) in
organizations.

3. Profit potential:
“Profit potential is the likely level of return or compensation to the entrepreneur for taking on the risk of developing
an idea into an actual business venture.” Without profit potential, the efforts of entrepreneurs would remain only an
abstract and a theoretical leisure activity.

4. Risk bearing:

The essence of entrepreneurship is the ‘willingness to assume risk’ arising out of the creation and implementation of
new ideas. New ideas are always tentative and their results may not be instantaneous and positive.

An entrepreneur has to have patience to see his efforts bear fruit. In the intervening period (time gap between the conception
and implementation of an idea and its results), an entrepreneur has to assume risk. If an entrepreneur does not have the
willingness to assume risk, entrepreneurship would never succeed.

Importance of Entrepreneurship:

Entrepreneurship offers the following benefits:

Benefits of Entrepreneurship to an Organisation:

1. Development of managerial capabilities:

The biggest significance of entrepreneurship lies in the fact that it helps in identifying and developing managerial
capabilities of entrepreneurs. An entrepreneur studies a problem, identifies its alternatives, compares the alternatives
in terms of cost and benefits implications, and finally chooses the best alternative.

This exercise helps in sharpening the decision making skills of an entrepreneur. Besides, these managerial capabilities
are used by entrepreneurs in creating new technologies and products in place of older technologies and products
resulting in higher performance.

2. Creation of organisations:

Entrepreneurship results into creation of organisations when entrepreneurs assemble and coordinate physical, human
and financial resources and direct them towards achievement of objectives through managerial skills.

3. Improving standards of living:

By creating productive organisations, entrepreneurship helps in making a wide variety of goods and services
available to the society which results into higher standards of living for the people.

Possession of luxury cars, computers, mobile phones, rapid growth of shopping malls, etc. are pointers to the rising
living standards of people, and all this is due to the efforts of entrepreneurs.

4. Means of economic development:

Entrepreneurship involves creation and use of innovative ideas, maximisation of output from given resources,
development of managerial skills, etc., and all these factors are so essential for the economic development of a
country.

Factors affecting Entrepreneurship:

Entrepreneurship is a complex phenomenon influenced by the interplay of a wide variety of factors.

Some of the important factors are listed below:

1. Personality Factors:

Personal factors, becoming core competencies of entrepreneurs, include:

(a) Initiative (does things before being asked for)

(b) Proactive (identification and utilisation of opportunities)

(c) Perseverance (working against all odds to overcome obstacles and never complacent with success)

(d) Problem-solver (conceives new ideas and achieves innovative solutions)

(e) Persuasion (to customers and financiers for patronisation of his business and develops & maintains relationships)

(f) Self-confidence (takes and sticks to his decisions)

(g) Self-critical (learning from his mistakes and experiences of others)

(h) A Planner (collects information, prepares a plan, and monitors performance)

(i) Risk-taker (the basic quality).

2. Environmental factors:

These factors relate to the conditions in which an entrepreneur has to work. Environmental factors such as political
climate, legal system, economic and social conditions, market situations, etc. contribute significantly towards the
growth of entrepreneurship. For example, political stability in a country is absolutely essential for smooth economic
activity.

Frequent political protests, bandhs, strikes, etc. hinder economic activity and entrepreneurship. Unfair trade practices,
irrational monetary and fiscal policies, etc. are a roadblock to the growth of entrepreneurship. Higher income levels
of people, desire for new products and sophisticated technology, need for faster means of transport and
communication, etc. are the factors that stimulate entrepreneurship.

Thus, it is a combination of both personal and environmental factors that influence entrepreneurship and brings in
desired results for the individual, the organisation and the society.

Entrepreneurial skills
Ten skills you need to have as an entrepreneur:

1. Curiosity. Great entrepreneurs are tasked to discover new problems, reveal potential niche opportunities, refactor
their original business process, and innovate. This is contingent on being passionate about different fields of study
and business cases outside of one’s comfort zone.

2. Time management. Careful priority planning, defining milestones, execution, and iteration are all important.
None of that would lead toward progress without the right project management and time allocation methodology that
gets the work done.
3. Strategic thinking. Learning to decompose a problem to its core and reveal opportunities for growth. Figuring out
creative solutions and identifying the low-hanging fruits. Defining the scope for an MVP and testing concepts within
limited time and with a low budget.

4. Efficiency. You need high performance when it comes to solving a problem. Applying the 80/20 rule and other
techniques for yielding higher results in less time. Switching between different chores and progressing effectively
day-to-day.

5. Resilience. Handling rejections, stress, burnouts, lack of focus, slow progress. Determination and eagerness to
fight the same dragon every morning are instrumental when it comes to building a business from scratch.

6. Communication. Crisp and concise communication is paramount for each and every interaction with clients,
partners, peers, clients, prospects.

7. Networking. Growing a network facilitates business opportunities, partnership deals, finding subcontractors or
future employees. It expands the horizons of PR and conveying the right message on all fronts.

8. Finance. Finance management will make or break a business. Handling resources properly and carefully assessing
investments compared to ROI is a solid requirement for entrepreneurs.

9. Branding. Building a consistent personal and business brand tailored to the right audience. Igniting brand
awareness in new verticals.

10. Sales. Being comfortable doing outreach and creating new business opportunities. Finding the right sales
channels that convert better and investing heavily in developing them. Building sales funnels and predictable revenue
opportunities for growth.

Entrepreneurial function
Entrepreneurs are broadly classified into/our categories as mentioned below:

1. Entrepreneurial Functions

2. Managerial Functions

3. Promotional Functions

4. Commercial Functions

5. Financial Functions
6.SOCIAL FUNCTION

These are now discussed in seriatim:

1. Entrepreneurial Functions:

The major entrepreneurial functions include risk bearing, organizing, and innovation. Since these are already
discussed under the heading 1.2 Evolution of the Concept of Entrepreneur, the same is, therefore, not discussed here
again for the sake of repetition.
2. Managerial Functions:

In simple words, management is getting things working with and through others. Different experts have defined term
management differently. According to Henri Fayol (1949) who is considered the father of ‘principles of
management,’ “management is to forecast, to plan, to organize, to command, to co-ordinate, and to control.”

In the opinion of George Terry (1953), “management is a distinct process consisting of planning, organizing,
actuating, and controlling performance to determine and accomplish the objectives by the use of people and
resources.”

The significance of management function lies in the fact that enterprises with excellent facilities and quality resources
have floundered and fizzled out due to either no management or poor management and enterprises with good
management but with poor facilities and resources have flourished and performed exceedingly well. In small-scale
enterprises, the entrepreneur who is the owner of the enterprise also, has to perform the management functions as
well.

The management functions performed by entrepreneur are classified into the following five types:

. Planning

2. Organizing

3. Staffing

4. Directing

5. Controlling

A brief description of each of these follows in seriatim:

1. Planning:

In common parlance, planning is pre-determined course of action to accomplish the set objectives. In other words,
planning is today’s projection for tomorrow’s activity. Planning pervades in all aspects of business. An entrepreneur
has to make decisions as to what is to be done, how it is to be done, when it is to be done, where it is to be done, by
whom it is to be done and so on.

The importance of planning lies in the fact that it ensures the smooth and effective completion and running of a
business enterprise. Absence of planning causes confusion which, in turn, affects the smooth performance of job
whatsoever it may be.

2. Organising:

The organizing function of an entrepreneur refers to bringing together the men, material, machine, money, etc. to
execute the plans. The entrepreneur assembles and organizes the above mentioned different organs of an enterprise in
such a way that these combinedly start functioning as one, i.e., enterprise. Thus, organizing function of an
entrepreneur ultimately provides a mechanism for purposive, integrated and co-operative action by many people in a
joint and organized effort to implement a business plan.
3. Staffing:

Staffing involves human resource planning and human resource management. Thus, staffing function of an
entrepreneur includes preparing inventory of personnel available, requirement of personnel, sources of manpower
recruitment, their selection, remuneration, training and development and periodic appraisal of personnel working in
the enterprise.

Business history is replete with evidences that it is basically the staff, i.e., personnel working in the organization that
makes all the difference. While appreciating the role of personnel in the success of an organization, L. F. Urwick had
remarked that, “business houses are made or broken in the long-run not by markets or capital, patents or equipments,
but by men.”

Andrew Carniege’s view that “Take my people and leave my factory, soon grass will grow on the floor. Take my
factory and leave my people, soon we shall build a better factory” also underlines the significance of people or
staffing in the making of an organization. However, staffing function is as crucial for the success of a business
enterprise is equally complex as well.

4. Directing:

The functions like planning, organizing, and staffing are merely preparations for setting up a business enterprise. The
directing function of entrepreneur actually starts the setting up of enterprise. Under the directing function, the
entrepreneur guides, counsels, teaches, stimulates and activates his/ her employees to work efficiently to accomplish
the set objectives.

Thus, directing function of entrepreneur concerns the total manner in which an entrepreneur influences the actions of
his / her employees/ workers. It is the final action of an entrepreneur in making his / her employees actually act after
all preparations have been completed.

5. Controlling:

Controlling is the last management function performed by the entrepreneur. In simple words, controlling means to see
whether the activities have been performed in conformity with the plans or not. Thus, controlling is comparison of
actual performance with the target or standard performance and identification of variation between the two, if any,
and taking corrective measures so that the target is accomplished.

3. Promotional Functions:

1. Identification and Selection of Business Idea:

Every intending entrepreneur wants to start the most profitable and rewarding project. The selection of the most
suitable business project involves a process. The intending entrepreneur, based on his /her knowledge, experience,
and information gathered from friends and relatives, generates some possible business ideas which can be examined
and pursued as a business enterprise.

This process is also described as ‘opportunity scanning and identification’. Then, the generated ideas are analysed in
terms of costs and benefits associated with them. Having made cost-benefit analysis of all the ideas, the most
beneficial idea is finally selected to be pursued as business enterprise.

2. Preparation of Business Plan or Project Report:

The entrepreneur prepares a statement called ‘business plan’ or ‘project report’ of what he / she proposes to take up.
In other words, business plan is a well evolved course of action devised by entrepreneur to achieve the specified
objectives within a specified period of time.
In this sense, business plan is just like an operating document. The preparation of business plan is not must, but it is
very much useful for the entrepreneur to establish his / her enterprise in an effective and smooth manner. But, it is
must for those entrepreneurs who intend to apply for financial assistance from the financial institutions and banks for
their enterprises.

It contains information about the intending entrepreneur, location of enterprise, requirement for land and building,
plant and machinery, raw material, utilities, transport and communication, manpower, requirement for funds
including working capital along with its sources of supply, break-even point and implementation schedule of the
project.

3. Requirement for Finance:

The entrepreneur prepares requirement for funds with its detailed structure. The financial requirement is also
classified into short-term and long-term separately. Then, the sources of supply to acquire the required fund are also
mentioned. How much will be the share capital in terms of equity and preference shares and how much will be
borrowed capital from different financial institutions and banks are clearly determined.

4. Commercial Functions:

1. Production / Manufacturing:

Once the enterprise is finally established, it starts producing goods or offering services, whichever be the case.
Production function includes decisions relating to the selection of factory site, design and layout, types of products to
be produced, research and development, and design of the product.

The ancillary activities include production planning and control, maintenance and repair, purchasing, store-keeping,
and material handling. The effective performance of production function, to a large extent, depends on the proper
production planning and control.

2. Marketing:

All production is basically meant for marketing. Marketing is the performance of those business activities that direct
the flow of goods and services from producer to consumer or user. Thus, marketing essentially begins and ends with
the customers. It is important to note that marketing is not just selling. In fact, marketing includes much more than
selling. Selling is the last function in marketing activities.

The examples of marketing activities are market or consumer research, product planning and development,
standardization, packaging, pricing, storage, promotional activities, distribution channel, etc. The success of
marketing function is linked with an appropriate ‘marketing mix’. Traditionally, marketing mix referred to 4 Ps,
namely, product, price, promotion, and physical distribution. Of late, 3 more Ps namely, packaging, people, and
process are also added to ‘marketing mix’.

3. Accounting:

The main objective of any business enterprise is to earn profits and create wealth. Whether the business is fulfilling
its objective or not is ascertained through accounting. What is accounting? According to the American Institute of
Certified Public Accountants, “Accounting is the art of recording, classifying and summarizing in a significant
manner and, in terms of money, transactions and events which are, in part at least, of a financial character and
interpreting the results thereof.”

Thus, accounting involves a process consisting of the following four stages:

1. Recording the Transactions

2. Classifying the Transactions

3. Summarising the Transactions

4. Preparing the Final Accounts

5. Analysing and Interpreting the Results.

The Profit & Loss Account is prepared for ascertaining whether the business earned profit or incurred loss during a
particular period of time also called ‘accounting year’. The Balance Sheet is prepared to know the financial position
of business during the accounting period. Hence, the Balance Sheet is also called ‘Position Statement.’

Financial Functions

Financial functions of an entrepreneur concerned with the control and planning of financial resources. In involves,
financial planning, raising funds and managing money, as follows.

Financial Planning

The financial planning function of an entrepreneur is critical to the success of any company. It provides the Business
Plan with firmness, by confirming that the goals set are attainable. 

However, financial planning is the job of determining how a business will afford to accomplish its strategic goals
and objectives.

A financial plan describes each of the activities, resources, equipment, and materials that are needed to achieve
objectives.

Proper financial planning includes these following tasks:

1. Evaluate the business environment.

2. Ensure the business objective and vision.
3. Identify the types of resources needed to accomplish the goal.
4. Calculate the cost of resources etc.

Financial planning helps an entrepreneur to set financial goals for the organization.

Raise Funds

Capital is known as the lifeblood of any business.

Thus, raising funds for the organization could be the most important function of an entrepreneur. It is a significant
part of your business and the most challenging one.

Here are 5 major sources to raise capital from.

1. Bootstrapping your Business.

2. Crowd Funding.
3. Get Angel Investor.
4. Bring Venture Capitalist.
5. Raise Money through Bank Loans.
If you bootstrap it will take a long time to get some real traction for your business and you may miss the opportunity.
But if you want to move fast, get used to outside sources of capital.

Utilizing Money

Almost 94% of the business fails within the first few years of launching. Not having enough money becomes the
most usual reason for it.

Money management is the process of managing your business’s capital through proper budgeting, tracking
expenses and setting financial goals.

Failing to manage money can lead you to late payments and coming up short on cash.

To keep track of your expenses and stay top of your business, follow these 6 tips.

1. Maintain Deadlines.
2. Track Spending.
3. Create a Budget.
4. Make Inventory.
5. Cut Cost and Increase Revenue.
6. Have Reserve Cash.

If you want to keep track of your money, which is very important as an entrepreneur, Keep up-to-date with your
accounting books

Social Functions

The social functions of an entrepreneur may not have a direct connection with companies growth but it plays a very
important role in building trust, reputation and a strong brand value.

Hence, the importance of social activities can’t be ignored at any aspect.

Social functions are all about solving potential community-based problems. It involves, fixing problems and create
jobs and community development.

Fix problems and create jobs

Entrepreneurs, especially social entrepreneurs, eager to solve the problems in society.

They have a great urge within them which leads them to take positive steps towards the improvement of society and
its culture.

In the process of addressing these problems, entrepreneurs build businesses to bring change and develop society.

As the business created, it provides people the opportunity of having jobs and improves their living standards. It
allows them for better education, health, and living hood.

Community Development
Whether you are a web-based company without local ties or a small business owner in one neighborhood, you can
take the lead on contributing to the local communities in many ways.

Here are a few impactful ways to stay engage with your community and build a relationship.

1. Promote Local Businesses.

2. Contribute to the local community.
3. Design a Business Model that Gives Back to the Charity.
4. Collaborate with other Businesses.

There are several ways you can connect with the local community through your entrepreneurial venture. Displaying
your support for non-profits and community organizations can help you build your value.

Conclusion:

Hope this helps you understand what it takes to be an entrepreneur and create a successful enterprise.

This description of the functions of an entrepreneur is enough to prove the absolute role of an entrepreneur in the
company’s prevalence.
Entrepreneur development programme

Meaning:

As the term itself denotes, EDP is a programme meant to develop entrepreneurial abilities among the people. In other
words, it refers to inculcation, development, and polishing of entrepreneurial skills into a person needed to establish
and successfully run his / her enterprise. Thus, the concept of entrepreneurship development programme involves
equipping a person with the required skills and knowledge needed for starting and running the enterprise.

Let us also consider a few important definitions of EDPs given by institutions and experts:
Small Industries Extension and Training Institute (SIET 1974), now National Institute of Small Industry Extension
Training (NISIET), Hyderabad defined EDP as “an attempt to develop a person as entrepreneur through structural
training.

The main purpose of such entrepreneurship development programme is to widen the base of entrepreneurship by
development achievement motivation and entrepreneurial skills among the less privileged sections of the society.”

According to N. P. Singh (1985), “Entrepreneurship Development Programme is designed to help an individual in

strengthening his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his
entrepreneurial role effectively. It is necessary to promote this understanding of motives and their impact on
entrepreneurial values and behaviour for this purpose.” Now, we can easily define EDP as a planned effort to
identify, inculcate, develop, and polish the capabilities and skills as the prerequisites of a person to become and
behave as an entrepreneur.

Need for EDPs:

That, entrepreneurs possess certain competencies or traits. These competencies or traits are the underlying
characteristics of the entrepreneurs which result in superior performance and which distinguish successful
entrepreneurs from the unsuccessful ones.

Then, the important question arises is: where do these traits come from? Or, whether these traits are in born in the
entrepreneurs or can be induced and developed? In other words, whether the entrepreneurs are born or made?
Behavioural scientists have tried to seek answers to these questions.

A well-known behavioural scientist David C. McClelland (1961) at Harvard University made an interesting
investigation-cum-experiment into why certain societies displayed great creative powers at particular periods of their
history? What was the cause of these creative bursts of energy? He found that ‘the need for achievement (n’ ach
factor)’ was the answer to this question. It was the need for achievement that motivates people to work hard.
According to him, money- making was incidental. It was only a measure of achievement, not its motivation.

In order to answer the next question whether this need for achievement could be induced, he conducted a five-year
experimental study in Kakinada, i.e. one of the prosperous districts of Andhra Pradesh in India in collaboration with
Small Industries Extension and Training Institute (SIET), Hyderabad.

This experiment is popularly known as ‘Kakinada Experiment’. Under this experiment, young persons were selected
and put through a three-month training programme and motivated to see fresh goals.

Objectives of EDP:

The major objectives of the Entrepreneurship Development Programmes (EDPs) are to:

a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for achievement.

b. Analyse environmental set up relating to small industry and small business.

c. Select the product.

d. Formulate proposal for the product.

e. Understand the process and procedure involved in setting up a small enterprise.

f. Know the sources of help and support available for starting a small scale industry.
g. Acquire the necessary managerial skills required to run a small-scale industry.

h. Know the pros and cons in becoming an entrepreneur.

i. Appreciate the needed entrepreneurial discipline.

j. Besides, some of the other important objectives of the EDPs are to:

k. Let the entrepreneur himself / herself set or reset objectives for his / her enterprise and strive for their realization.

l. Prepare him / her to accept the uncertainty in running a business.

m. Enable him / her to take decisions.

n. Enable to communicate clearly and effectively.

o. Develop a broad vision about the business.

p. Make him subscribe to the industrial democracy.

q. Develop passion for integrity and honesty.

r. Make him learn compliance with law.

Entrepreneurship Development Programme (EDP) is a programme which helps in developing the entrepreneurial
abilities. The skills that are required to run a business successfully is developed among the people through this
programme. Sometimes, people may have skills but it requires polishing and incubation. This programme is perfect
for them. This programme consists of a structured training process to develop an individual as an entrepreneur. It
helps the person to acquire skills and necessary capabilities to play the role of an entrepreneur effectively. As per
National Institute of Small Industry Extension Training, Hyderabad, an EDP is an effort of converting a person to an
entrepreneur by passing him through a thoroughly structured training. An entrepreneur is required to respond
appropriately to the market and he/she is also required to understand the business needs. The skills needed are varied
and they need to be taken care in the best possible way. EDP is not just a training programme but it is a complete
process to make the possible transformation of an individual into an entrepreneur. This programme also guides the
individuals on how to start the business and effective ways to sustain it successfully.

Objectives of EDP

The objective of this programme is to motivate an individual to choose the entrepreneurship as a career and to prepare
the person to exploit the market opportunities for own business successfully. These objectives can be set both in the
short-term and long-term basis.

 Short-term objectives: These objectives can be achieved immediately.In the short-term, the individuals are
trained to be an entrepreneur and made competent enough to scan existing market situation and environment.
The person, who would be the future entrepreneur, should first set the goal as an entrepreneur. The
information related to the existing rules and regulations is essential at this stage.
 Long-term objectives: The ultimate objective is that the trained individuals successfully establish their own
business and they should be equipped with all the required skills to run their business smoothly.

The overall objectives of EDP are mainly to help in rapid industrialisation by supplying skilled entrepreneurs. At the
same time, it also industrialises underdeveloped areas. The performance of small and medium scale industries are
expected to improve by this and therefore providing a huge scope of employment generation in these sectors. This
programme primarily aims at providing self-employment to the young generation.

 An Entrepreneurship Development Programme primarily plays four roles to help an individual to become an
entrepreneur. They are:

 Stimulatory Role: It aims at influencing people in large number to be the entrepreneur. This includes:

1. developing managerial, technical, financial, and marketing skill

2. inculcating personality traits
3. promotes and reforms entrepreneurial behaviour and values
4. identifying potential entrepreneur applying scientific methods
5. motivational training and building proper attitude
6. strengthening the motive of a person and giving recognition
7. the valuable know-how of the local products and the processes help in selection of products, preparation of
project reports

 Supportive Role: It helps in the following ways:

1. registration of the business

2. procurement of fund
3. arrangement of land, power, water, shed etc.
4. support in purchase of right kind of machinery and equipment
5. supply of raw materials and common facilities
6. Providing tax relief, subsidy etc.
7. guidance in product marketing
8. support for management consultancy

 Sustaining Role: It aims at providing an effective safeguard to businesses to sustain against the cut-throat
market competition. This includes:

1. help in modernisation, expansion, and diversification

2. additional financing for further development
3. deferring interest payment
4. creating new marketing processes
5. helping access to improved services and facility centres

 Socio-economic Role: It aims at upgrading the socio-economic status of the public and includes:

1. identifying entrepreneurial qualities in practicality

2. creating employment opportunities in micro, small, and medium industries on an immediate basis
3. arresting concentration of industries by supporting regional development in a balanced manner
4. focusing on the equal distribution of income and wealth of the nation
5. channelizing the latent resources for building an enterprise

Motivation for entrepreneurs.

Entrepreneurial motivation is the process of transforming an ordinary individual to a powerful businessman, who can create
opportunities and helps in maximizing wealth and economic development. It is defined as various factors stimulate desires and
activates enthusiasm in entrepreneurs which make them attain a particular goal. Entrepreneurship is the process of identifying
strengths and opportunities which help in the realization of one’s dreams for designing, developing and running a new
business by facing threats and risks effectively.

To become an entrepreneur one should identify their strengths and opportunities from the external environment. Here
motivation plays a major role in identifying their own strengths to become strong leaders or powerful entrepreneurs which
make them to accepting risks and face uncertainty for the purpose of reaching pre-described goals.

Motivation makes entrepreneur by fulfilling higher level needs such as recognition, esteem, and self-actualization. Various
theories explained motivation as an influencing concept, it can bring out hidden talents and creativity, and it contributes to the
individual goals and society development. Maslow’s need hierarchy theory, Hertzberg’s two-factor theory, and David MC
Clelland’s acquired needs theory proved that motivation can bring energy, enthusiasm, creativity and efficiencies in fulfilling
the desired objectives.

Motivation activates innate strengths to achieve a particular goal, many questions arise during knowing this concept
such as why can’t all the human beings become leader or entrepreneurs even though they face same motivation
during his/her lifetime? Who can become effective motivators? What type of motivation can influence one’s
behavior? Is the extent of motivation decides the power of externalized behavior? Etc, entrepreneurial motivation is a
psychological process in which all the motives may not influence with the same intensity, it varies with the
perception levels of the individuals and factors responsible for the motivation. Sometimes a single motive can
influence to become strong and powerful entrepreneurs, these motives may come from various factors as follows.

 Internal factors
 External factors

Internal factors

Need for self-actualization

It is explained by Maslow and it is the top level need refers to the desire for self-fulfillment. Need for freedom and
self-fulfillment makes the individuals or employees of the organization make them become powerful leaders or
entrepreneurs.
Optimism

Individuals having positive mindset get motivated by finding opportunities during critical situations also. Positive
attitude and perception motivate an individual to work out for the best even during unfavorable and tough situations
also.

Positive attitude

The positive attitude is the most important factor which motivates the individuals to become successful entrepreneurs.
Habituating positive attitude can lead an individual to develop constructive thinking; it motivates them to become
powerful entrepreneurs, finally, the positive attitude can prove that how valuable they are.

Self-motivation

Most of the successful and powerful entrepreneurs are self-motivated; here they fulfill the desired objectives by
motivating themselves. Though many individuals have ideas but they cannot put those for business development;
however self-motivated people can take decisions to implement ideas.

Enthusiasm

Enthusiasm motivates in finding better solutions, finally, it stabilizes the ideas and makes them become creators and
innovators which result in successful entrepreneurs.

Commitment

Commitment towards a goal can make to achieve success. It motivates entrepreneurs by inspiring and developing
emotional attachment towards an objective.

Education

Education is the most important factor it motivates a person to innovate and create new products, this result in
establishing an organization or a new business venture. The knowledge acquired during the course of time and innate
skills highly motivates a person to become a successful entrepreneur.

Background

Family background, occupational background and a person’s own experience in a job motivates him/her to become
an entrepreneur. Having entrepreneurial background acts as a clear path to becoming a successful and powerful
entrepreneur.

Financial background

Finance is the scarce resource which motivates and enables a person to become an entrepreneur. Money can make many
things it is the major thing in deciding one’s status and development, strong financial background facilitates to start a business.

External factors

Influence

Influence of family members, friends, and society motivates the individuals to become entrepreneurs. The extent of
influence shows an effect on the character, behavior, and development, it comes from the external environment. Here
people get influenced by seeing successful entrepreneurs or by the words of others.
Availability of resources

Resource availability motivates at a high extent to become entrepreneurs, availability of land, labor, money,
machinery, and materials make individual to start a new business. Though there is creativity, intelligence,
commitment and enthusiasm in the individuals, but the unavailability of resources becomes an obstacle for new
entrants or entrepreneurs.

Product’s demand

Higher demand for a particular product motivate entrepreneurs to produce innovative and value added products, here
product’s demand motivates the individuals to become entrepreneurs. The hope of success makes them produce
innovative products or substitute products, some entrepreneurs fulfill the market demand by producing
complementary goods also. So the increase in products demand highly motivates to become entrepreneurs.

Government policies

Subsidies and benefits given by the government motivate entrepreneurs to produce new products or motivates
individual to become entrepreneurs. Government policies show higher influence on establishing new firms and it
leads to economic development. In the case of small scale industries, rural people are encouraged by the various
training programs, financial support, and subsidies; it is one of the main reasons for the establishment of new firms
and arrival of new entrants.

Information availability

Market knowledge and information motivate individuals to enter into the markets and to become entrepreneurs. If
there is abundant information then it automatically creates interest in the minds of enthusiastic people to become
entrepreneurs. Availability of information facilitates research and producing innovative and value added products,
and it creates a scope to become entrepreneurs.

Technological advancement

Technological advancement acts as a path to transform ideas into products, feasibility in production and expected
success rate highly motivates to become entrepreneurs. It reduces errors and cost of production and maximizes
success rate, this is the reason why people are interested in becoming entrepreneurs with the increase in technology.

Changing tastes and preferences

Changing tastes and preferences of the customers maximizes the chance to produce substitute and complementary
goods, it creates a scope to innovation and establishment of the new ventures.