Descriptive Essay on

Entrepreneurial Mindset and

Entrepreneurial Method

Submitted by:
Utsab Pokharel
MBA IV; Sec A

Submitted to:
Sohan Babu Khatri
Lecturer: Entrepreneurship and Innovation

Ace Institute of Management

New Baneshwor Kathmandu
December 31 2022
 Entrepreneurial Mindset and Entrepreneurial Method

Introduction

“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity”. -
Peter Drucker

Entrepreneur often define as the people who creates the new business and adding the value to
society. They solve the problem faced by the people in day to day life by providing product and
services with the aim of earning profit. Simply, entrepreneurship is the process of organizing and
running new business in order to generate money while taking financial risk. It is also the process
of transforming the status quo by solving the existing problems and pain points in our society,
often by introducing an innovative product or service or creating the new markets.

The concept of entrepreneurial orientation incorporates elements, including innovativeness, risk-

taking, competitive aggressiveness autonomy and pro-activeness Rauch et al (2009). They also
found that a strong and positive link between these characteristics and entrepreneurial
performance. Entrepreneurship is the process of creating something new with a value, particularly
responding to the opportunities available. It includes the time, efforts and assumptions of risks,
with the expectation of receiving the monetary or non-monetary reward at the end. The dynamic
process of producing riches for ceremonial purposes is called entrepreneurship. People who take
on the biggest risks in terms of money, time, and/or career commitment, or who add value to some
goods or services, are the ones that create wealth. The goods or services may or may not be novel
or distinctive, but the entrepreneur must nonetheless provide value by acquiring and locating the
required abilities and resources (Ashourizadeh et al.2014).

A collection of abilities known as an entrepreneurial mindset enables people to recognize

opportunities, seize them, learn from setbacks, and flourish in a range of contexts. It also refers to
a set of characteristics and abilities that help individuals to recognize opportunities, anticipate and
deal with difficulties, and draw lessons from both triumphs and failures in both professional and
non-professional contexts. According to Hisrich et al. (2009), entrepreneurship is the process of
starting a business, running it, and taking on the associated risks. It is also the process of creating
something new by investing the necessary time, assuming the associated financial, psychological,
and social risks, and reaping the benefits of financial and personal independence.

Entrepreneurship brings economic and social mobility and is a nation's secret economic weapon
(Oyedijo, 2012). Today's majority of economists concur that entrepreneurship is essential to
promoting economic growth and job possibilities in all nations. Successful small entrepreneurial
firms are the main causes of job creation, economic development, and poverty reduction in the
developing world. According to Ogundele (2005), there are three levels of entrepreneurship: the
first level is characterized by small businesses or enterprises; the second level is characterized by
the establishment of new firms; and the third level is characterized by innovation and the systemic
coordination of complex production.

Evolution of the concept of ‘Entrepreneurship’

The term entrepreneur, is translated from the French word ‘ENTREPRENDRE’ means ‘to do
something’ or ‘to undertake’ in thirteenth century. Later on, by the sixteenth century, the noun
form entrepreneur was being used to refer to someone who undertakes a business venture.

The major evolutions of entrepreneurship are listed below:

o Earliest Phase

The great and earliest example of an entrepreneur as ‘go between’ Marco Polo who attempted to
establish trade to far east. He contracts an agreement with capitalist to sell hos good, it provided
loan at highest interest rate with insurance. In this time the capitalist being passive risk taker and
the merchant are the physical and emotional risk taker. After the selling of good the capitalist and
merchant taking the profit of 70 and 30 percent respectively.

o Middle Age

The term "entrepreneur" was once used to refer to both a person who directed huge productions
and an actor. People didn't take any chances because the government of the nation used to give all
the resources; an entrepreneur only needed to manage them. People didn't take any chances
because the government of the nation provided all the resources; all an entrepreneur needed to do
was manage them. The priest was a normal middle-class businessperson. Castles and other fortified
structures, as well as public buildings, abbeys, and cathedrals, were once constructed by the person
in charge of major architectural projects.

o Seventeenth Century

During seventeenth century, the term entrepreneur was used for a person who entered into a
contractual arrangement with the government to perform a specified product or services. The
contract was fixed price and any resulting profits and losses belongs to the entrepreneurs, thus the
risk taking arising out of the expedition. An early theory of entrepreneurship was created by
renowned French economist Richard Cantillon, who is recognized as the term's creator during
seventeenth century. He perceived the businessman as a risk-taker and noted the differences
between supply and demand, as well as opportunities to acquire cheaply and sell for more money.

o Eighteen Century

In the eighteenth century, the distinction between those who had money and those who did no was
made. The capital provider was distinguished from the entrepreneur. The global industrialization
that is taking place is one factor is the divergence. The cotton gin was created by American inventor
Eli Whitey, who is most known for it. Which was one of the major discoveries of the industrial
revolution.

o Nineteenth Century

In the nineteenth century, entrepreneurs were view from an economic perspective. A business is
organized and run by an entrepreneur for their own benefit. He pays market rates for the supplies
used in the business, the use of the land and hire of individuals and the capital he needs. He offers
his own initiative, expertise and creativity to the planning, organization and management of the
businesses. In addition, the entrepreneur accepts the possibility of both loss and gain as a result of
unforeseeable and unpredictable events. He keeps for himself the net remainder of the enterprises
annual receipts after all cost have been covered.

o Middle of the Twentieth Century

Joseph A. Schumpeter was the first economist to concentrate on the role of entrepreneurship in
economic development through innovations in the middle of twentieth century. According to him,
the roe of an entrepreneur is to “reform or revolutionize the pattern on of the production by
exploiting an invention or more generally, untried technological method of producing a new good
or good in a new way, opening a new source of supply for materials or new outlets for goods, by
organizing a new industry” (Schumpeter, 1972).

o Twenty First Century

In twenty first century it guarantees the highest level of production and distribution process
optimization, modern global entrepreneurship development is one of the most promising strategies
for overcoming the effects of the global economic crisis and preventing and leveling future
financial system crises (Morozova, Popkova, and Litvinova 2019). Entrepreneurs turn an idea into
a company and pursue commercial endeavors as sources of income (Leonora and Alusen 2016).
Thus, today's entrepreneurs prioritize social responsibility, globalization, quality products,
innovation and creativity, and tech-based entrepreneurship.

Difference between Entrepreneurship and Small Business

The appeal of growth is the key distinction between entrepreneurship and small business. Small
businesses can be defined as those whose owners are satisfied with the way their company is now
run and do not intend to pursue more expansion chances. On the other hand, a firm is considered
to be entrepreneurial if its owner has distinct and original vision for it and are open to growth
chances. Small firms do not strive for expansion thus they stay small or medium sized doe the
duration of their existence. Even said some tiny forms could be flush with cash, which does not
necessarily imply that they are not successful. Most small businesses strive for limited expansion
with ongoing profitability, whereas entrepreneurial ventures aim for quick growth and substantial
returns. Because of this, entrepreneurial endeavors typically have a substantial positive impact on
economies and communities, which also has a knock-on effect on other sectors like job creation.
In this regard, small enterprises are more constrained and remain tied to their own industry and
clientele.

Small business is a limited scope enterprise that is owned and run by a single person or group of
people. The management of a small firm is convenient. Therefore, certain people and groups favor
such simplicity. The primary goal of a small firm is to turn a profit; however, this ability is
constrained since the owners are unwilling to look for new business prospects. The two most
prevalent forms of small businesses are partnerships and sole proprietorships.

Entrepreneurship is defined as the process of planning, establishing, and running a new company
that often begins small and strives towards expansion. An entrepreneur created it. Since the success
of entrepreneurship is a product of the entrepreneur's vision, it is challenging to separate the
entrepreneur from the enterprise.

According to Bygrave and Hofer (1991), the field of entrepreneurship change from the focus on
the characteristics of the entrepreneur to the characteristics of the entrepreneurial process. By
focusing on the process, entrepreneurs are identified by their participation in the process, not by a
unique set of features. Osteryoung, Newman and Davies (1997), defined small business stating
that, they must meet three criteria as it must be measurable and observable, it must be congruent
the market system and it must be meaningful. Small business has limited access to funding beyond
personal savings, family and local banks.

Entrepreneurial Mindset and its Characteristics and Themes of

Entrepreneurship

An entrepreneur's mindset is described as how they handle uncertainty and how they take
advantage of its advantages in their business decisions. The entrepreneurial mentality is a
metacognitive way of thinking, in contrast to mindsets, which are typically generated as knowledge
to act (McGrath and MacMillan, 2000). An entrepreneurial mindset is a specific set of beliefs,
knowledge, and thoughts processes that drive entrepreneurial behavior. It is related to take
ownership, self-directed, action oriented and highly engaged. Entrepreneurial mindset also tends
to optimistic interpretation, creative, critical thinking and innovative. An individual with an
entrepreneurial mindset inwardly evaluates his or her views based on holistic rather than functional
features while coming up with new ideas, assessing opportunities and risks, or starting and running
a firm.

According to McMullen and Kier (2016), Entrepreneurial mindset is the "capacity to discover and
exploit possibilities without regard to the resources currently under their control They do, however,
draw a crucial distinction by asserting that it only functions when entrepreneurs are motivated by
promotion. Entrepreneurial mindset, according to Njeru (2012), displays itself through invention,
creativity, business acuity, and risk-taking. Entrepreneurial innovativeness is characterized by
organizational readiness and propensity to implement the intended innovation, as shown by
behaviors, strategies, activities, and processes. According to some researchers, having an
entrepreneurial mindset means being able to continuously come up with new product or service
ideas, put all available resources to new uses, and draw on a variety of new sources for inspiration.
Resources must be gathered, new products or services must be produced, and users must receive
them.

An enterprising mindset is about having a way of thinking, which sees opportunities, rather than
barrier that sees possibilities rather than failure and wants to do something to make a difference
rather than sit and complain about the problems (Susilo, 2014). It's no longer just business owners
that possess the entrepreneurial mindset. Businesses are increasingly looking for, supporting, and
rewarding people who have an entrepreneurial mindset; these individuals are frequently referred
to as "intrapreneurs", and they are also evaluating how well their corporate cultures support
entrepreneurial thought and action. Mitchell (2007) contends that the area of entrepreneurship has
evolved the mindset of a researcher looking to advance business and technological potential within
the firm. As a result, having an entrepreneurial attitude aids in identifying challenges and equips
the researcher to overcome them. Business literature bases its concept of an entrepreneurial
mentality on people's ability to observe, connect, and process information about themselves, other
people, tasks, and uncertain surroundings. The most important aspects in educational contexts are
teachers' attitudes and behaviors or learning environments. The various characteristics that an
entrepreneur should have in order to build the correct mindset are listed below:

 Optimism

Entrepreneurs who succeed persevere in the face of obstacles. Being upbeat about a circumstances
entails approaching it as a potential that should be investigated. An entrepreneur views a difficulty
as a chance to learn. Boost your self-assurance. To build and polish your ideas, use the lessons
you’ve learned from each experience. Recognize that every problem has a solution.

 Commitment
While your enthusiasm may inspire you to launch your own business, your commitment will
enable you to endure despite any obstacles. A vital quality of an entrepreneur is the capacity to
endure persistent rejection and failure. Entrepreneurs that are successful learn from rejection and
avoid having it lower their self-esteem. Keep criticism off of yourself and use it as motivation to
improve your business concepts. Focus on making comparisons between yesterday and now with
a “see how far I’ve come” mentality. When you are motivated, you can see your accomplishments.
You are motivated to keep pushing forward by it.

 Leadership

The entrepreneurs must lead and inspire the team give them responsibility, and depend on them
for support if wants to be a good entrepreneur. It is essentials to convey the concepts in an inspiring
way. The key to effective communication is clarity. Entrepreneurs have a better chance pf
achieving their goals by increasing the teams focus and engagement. Create your own engaging
call to action and constantly mimic it.

 Independence

Through networking is important for exchanging ideas and obtaining perspective entrepreneurs
are more than willing to take issues into their own hands. One of the reasons a person who has
already had a lengthy career in business may decide to leave their organization is the desire for
independence.

 Risk taker

An entrepreneur assumes risk. They move resources away from low yielding, low productivity
areas and toward higher productivity, higher yielding areas. Naturally, there is a possibility that
they will fail. The returns should more than cover any risk, though if they are even modestly
successful. As a result, the risk taker is often used to describe entrepreneurs. Instead of taking too
few or too many chance, successful entrepreneurs take reasonable risks.

 Creative Thinker

People with an entrepreneurial attitude are characterized by their willingness to challenge the status
quo. They perceiver a world filled with issues and are always conducting analysis to identify a
more original, straightforward, or efficient course of action. Entrepreneurs are able to observe how
something is carried out and think of improved methods.

 Growth Mindset

Entrepreneurs have a growth mindset, and think to the learning and intelligence can be changed
with the extra effort and time. Increasing how quickly information flows across the connections.
Some scholar also finds that if people believe their brains can grow, they behave differently means
people can cultivate growth mindset.

 Need for Achievement

Entrepreneurs have a great desire for success, which accounts for their seemingly unstoppable
drive. People with a high demand for achievement appreciate taking modest risks, which according
to studies inspires them to work more. In addition, McClelland found that some civilizations
created a higher percentage of individuals with high need attainment. As a result, high achievers
set challenging short term and long term objectives that, when attained offer a great degree of
personal satisfaction.

According to Spinelli and Adams (2012) the major themes of entrepreneurs are commitments and
determination, courage, leadership, opportunity obsession, tolerance of risk ambiguity and
uncertainty, creativity, self-reliance and adaptability and motivation. One of the major elements of
entrepreneurs is Commitment and determination. You need to be willing to give up all of your
luxuries, including job stability and a private life, if you wish to start your own company from
beginning. Having the ability to face issues head-on and not being afraid of failure are a few
qualities that might be categorized as courageous. Without leadership, no one can be a successful
entrepreneur. In addition to having the ability to build a strong team and inspire people to share
the vision, he or she must be able to do so. Entrepreneurs are also known for their fascination with
obsessions and opportunities.

Entrepreneurial Principles and Method/ Process

Entrepreneurs are those who bring something worthwhile into being. Of course, the traditional tale
involves a garage, but a garage owner need not be small or self-funded. An entrepreneur gives up
security and welcomes the unpredictability of creating a company around an idea. However,
whether or not they are successful, they add value to both society and their own values in the
process. According to Dew and Sarasvathy (2008), major principles that are applied by expertise
entrepreneur as below:

 The patchwork quilt principle

This is the idea behind action that is motivated by means rather than by a specific aim. Here, the
focus is on inventing something new out of nothing rather than looking for novel ways to
accomplish predetermined objectives.

 The affordable loss principle

According to this approach, one should commit in advance to the amount of risk they are ready to
take rather than spending money on projections about the project's expected returns. Expert
entrepreneurs accomplish this by only devoting the time, effort, and resources to each step of the
entrepreneurial journey that they can afford to waste. They choose tasks and objectives to learn
specifics about their business prospects, and then they pivot, alter, or cut their losses based on what
they find out. Even if their trials don't result in successful businesses, they may still see the bright
side of them.

 The bird-in-hand principle

According to this principle, negotiations should take place with any and all interested parties who
are prepared to make genuine commitments to the project, without considering opportunity costs
or conducting in-depth competitive studies. Entrepreneurs must consider three questions in order
to understand the available options: i) Who am I? ii) What I know? iii) Who do I know?
Additionally, the rule stipulates that businesspeople should. Negotiate without considering
opportunity costs or doing in-depth competitive evaluations with any and all stakeholders who are
willing to make genuine commitments to the project (Sarasvathy, 2009).

 The lemonade principle

Accept the unexpected events and bad news that come with uncertain circumstances and try to
make the best of them. Entrepreneurs acknowledge that they have no idea what will happen next
and that their business models may need to evolve as they learn from the market. While corporate
executives are frequently captivated by "what if" scenarios, trying to plan for them and define
implications for every imaginable situation. As a result, business owners view both positive and
negative surprises as chances to support their claims.

 The pilot in plane principle

Instead of restricting entrepreneurial efforts to exploitation of exogenous causes like technical

trajectories and socioeconomic trends, this approach encourages depending on and working with
human action as the primary driver of opportunity.
The pilot-in-the-plane principle

The above mentioned principles can be linked with the figure shown below to understand the
process flow of how and entrepreneurial mindsets works.

Figure 1 Dynamics of Effectual Logic

As shown in the above figure, successful entrepreneurs start with who they are what they know
and whom they know. Then they take action based on what they can afford to accomplish. After
determining what they can afford to take on they start negotiating a series of agreements with
people who join. These commitments will decide the opportunities that come as a results of them.
The various commitments will take one of two directions; either more stakeholders will join the
stakeholder network, or the ventures limitations will be combined into a useful artifact.

A business plan must be developed, required resources must be determined, and the generated
resources must be managed as part of the entrepreneurial process, (Hisrich, Peters, & Shepherd,
2009). The first step in the entrepreneurial process is to identify oneself. My knowledge? and those
I am familiar with. Knowing the specifics of our qualifications and qualities entails. The
entrepreneur then assesses what can be done or assesses the manageable risk/loss. Interact with
experts to learn more about new businesses and to gather information. The new objective and
means for their business can then be determined. On the other hand, the typical procedure for
launching a firm begins with the discovery of a market problem. Afterwards, conducting study
into potential solutions and getting ready the necessary financial and other resources The
businessperson then begins the manufacture of commodities or the rendering of services.

Difficulties and Challenges of Entrepreneurship in Nepal

Nepalese entrepreneurs have faced various difficulties during starting a new venture and operating
the business. Entrepreneurs and businessman thinks that their major problems to start a new startup
are lack of capital, political insecurity, investment security, lack of proper planning and research,
low return on investment, high risk, unfavorable government policy social judgments. These are
the major causes that demotivate the Nepalese entrepreneurs to start the new business are as follow:

 Unavailability of adequate capital

According to various research, the major difficulties for new start up is lack of adequate capital.
Startups have to struggle with problems related to funding. In Nepal, the banking sector are the
major source of funding for the enterprise. The small businesses have to pay around 14 % interest
rate to banks for loan money with additional service charge. Getting loan from bank is very lengthy
and difficult process for the small business due to very inconvenient process and lack of collateral.

 Lack of good governance

In Nepal, lack of good governance is another difficulty for the new startups. Unstable government,
corruption and bribe, strike etc. makes the situation even worse. When investor wants to start a
new venture he/she have to visit the Kathmandu for registration and other legal process. Also
entrepreneurs have to pay high incorporation fees as well as tax and vat amount is also high.
Likewise, lack of good policy, involvement of political parties etc. are becoming barrier to the new
enterprise in Nepal.

 Hiring the right talent

In new startup finding suitable and capable personnel is very challenging in Nepal. Hiring expert
can be very expensive and they cannot afford it. Most of the people are migrating to abroad for
better opportunities, it leads to difficult for the new startup to find the talent. Also reducing
employee turnover is also major issues for the new ventures in Nepal.

 Lack of proper plan

Many startups try to replicate the structures of an established brand and fail. Because most of the
emerging entrepreneurs in Nepal, just start their business with an ‘idea’ without proper planning.
They do not invest on market research, without determining market needs, it helps to know the
growth of the business.

 Legal issues

Unfavorable policies, rules, and regulations in Nepal have started to affect business owners. The
time-consuming and difficult company registration and tax processes discourage prospective
business owners. There is no assistance from government agencies during these protracted
processes of firm establishment. Instead, some of them want bribes to expedite the procedure. The
inconsistent nature of the business climate is regarded by entrepreneurs as dangerous.

Thus, entrepreneurs face various challenges besides above mentioned like social judgements and
a failure avoidance culture, corruption, unsupportive society. However, there are also number of
opportunities for new entrepreneurs in Nepal for profitable businesses.
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