ENTREPRENEURSHIP

THE ENTREPRENEURIAL PROCESS

The Entrepreneurial Process includes the systematic steps required to create and implement a new business venture. This includes all
the functions activities, and actions associated with perceiving opportunities and creating organizations to pursue them.
The process has four distinct phases:
(1) Identification and evaluation of the opportunity,
(2) Development of the business plan,
(3) Determination of the required resources, and
(4) Management of the resulting enterprise.
Although the phases proceed progressively, no one stage is dealt with in isolation or is totally completed before work on the other
phases occurs. For example, to successfully identify and evaluate an opportunity (phase 1), an entrepreneur must have in mind the
type of business desired (phase 4).

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THE ENTREPRENEURIAL PROCESS
1. Identify and evaluate the opportunity :

The first step in the entrepreneurial process is the identification of opportunity. This may be from his own idea or from external

sources like consumers and business associates, members of distribution system, independent technical organizations,

consultants, etc. Consumers are the best source of ideas for a new venture who spells out the need of a product or service. The

business associates also can give ideas of a product or service.

Due to the close contact with the end user, member of distribution system also see product needs one can identify new business

opportunities through a discussion with a retailer, wholesalers or a trade representative.

Some individuals are highly technical oriented and are not interested in any entrepreneurship. Such people conceptualize new

business opportunities that can be given to the interested. Some government organizations and R & D centers also provide new

ideas.

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THE ENTREPRENEURIAL PROCESS
Whether the opportunity is identified by using input from consumers, business associates, channel members, or technical people, each
opportunity must be carefully screened and evaluated. This evaluation of the opportunity is perhaps the most critical
element of the entrepreneurial process, as it allows the entrepreneur to assess whether the specific product or service has the
returns needed compared to the resources required. This evaluation process involves looking at the length of the opportunity, its real
and perceived value, its risks and returns, its fit with the personal skills and goals of the entrepreneur, and its uniqueness or
differential advantage in its competitive environment.
Finally, the opportunity must fit the personal skills and goals of the entrepreneur. It is particularly important that the entrepreneur be
able to put forth the necessary time and effort required to make the venture succeed. Although many entrepreneurs feel that the desire
can be developed along the venture, typically it does not materialize. An entrepreneur must believe in the opportunity so much that he
or she will make the necessary sacrifices to develop the opportunity and manage the resulting organization. Opportunity analysis, or
what is frequently called an opportunity assessment plan, is one method for evaluating an opportunity. It is not a business plan.
Compared to a business plan, it should be shorter; focus on the opportunity, not the entire venture; and provide the basis for making the
decision of whether or not to act on the opportunity.

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THE ENTREPRENEURIAL PROCESS
An opportunity assessment plan includes the following: (a) Description of product or service (b) An assessment of the opportunity
(c) Assessment of the entrepreneur and his team (d) Resources needed (e) Amount and source of capital needed (f) Rewards
and profit expected. The assessment of the opportunity requires answering the following questions:
❑ What market need does it fill?
❑ What personal observations have you experienced or recorded with regard to that market need?
❑ What market research data can be marshalled to describe this market need?
❑ What patents might be available to fulfill this need?
❑ What competition exists in this market?
❑ How would you describe the behavior of this competition? What does the international market look like?
❑ What does the international competition look like?
❑ Where is the money to be made in this activity?

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THE ENTREPRENEURIAL PROCESS
2. Developing a business plan
A good business plan must be in order to exploit the defined opportunity. This is a very time‐consuming phase of the entrepreneurial
process. An entrepreneur usually has not prepared a business plan before and does not have the resources available to do a good jo
b. A good business plan is essential to developing the opportunity and determining the resources required, obtaining those resources,
and successfully managing the resulting venture.
A typical business plan includes the following:
❑ Assessment of the business environment.
❑ A competitor's analysis.
❑ Description of the business strategic direction.
❑ A detailed description of the potential business (i.e. the products and services, legal structure, governance of the business, etc.).
❑ The management and decision making structure.
❑ The business organization and major appointments.
❑ Marketing and sales plan with multi‐year sales projections.
❑ A human resource management plan.
❑ A resource and infrastructure plan.
❑ A performance management plan.
❑ A detailed multi‐year financial plan.
❑ Timelines for implementation of the plan.
❑ Other issues important to business implementation and growth.

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3. Determination and Organizing the Resources

This process begins with the assessment of present resources. Enough care

must be taken not to underestimate the amount and nature of resources

required. The risk involved with insufficient or incorrect resources should

be calculated. Organizing the required resources at the appropriate time is

another important aspect of entrepreneurial process. Alternative sources of

supply, process of manufacture etc., are to be planned.

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4. Manage the Enterprise:

After resources are acquired, the entrepreneur must use them to implement

the business plan. The operational problems of the growing enterprise must

also be examined. This calls for a management with all functions like

planning, organizing, directing, and controlling.

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Role of Entrepreneurship in Economic Development

The role of entrepreneurship in economic development has nine salient takeaways: entrepreneurship is an instrument of
social change and economic growth.

1. Raises Standard of Living

A significant role of entrepreneurship in economic development is that it can greatly enhance the standard of living
for individuals and communities by setting up industries and creating wealth and new positions. Entrepreneurship not
only provides large-scale employment and ways to generate income, it also has the potential to improve the quality of
individual life by developing products and services that are affordable, safe to use, and add value to their lives.
Entrepreneurship also introduces new products and services that remove the scarcity of essential commodities.
2. Economic Independence

Entrepreneurship can be a path to economic independence for both the country and the entrepreneur. It reduces the nation’s
dependence on imported goods and services and promotes self-reliance. The manufactured goods and services can also be exported
to foreign markets, leading to expansion, self-reliance, currency inflow, and economic independence. Similarly, entrepreneurs get
complete control over their financial future. Through their hard work and innovation, they generate income and create wealth,
allowing them to achieve economic independence and financial security.
3. Benefits of New Firms and Businesses

Entrepreneurs identify market needs and develop solutions through their products and services to begin their business venture. By
starting new firms and businesses, entrepreneurs play a key role in shaping the economy and creating a more dynamic and diverse
business landscape. Entrepreneurship also promotes innovation and competition, leading to new and improved products and
services that contribute to economic growth and development.

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Role of Entrepreneurship in Economic Development

4. Creation of Jobs
Entrepreneurship is a pivotal driver of job creation. Running the operations of new businesses and meeting the requirements of
customers results in new work opportunities. Entrepreneurship also drives innovation and competition that encourages other
entrepreneurs and investments, creating new jobs in a wide range of industries, from manufacturing and construction to service and
technology sectors.
5. Encourages Capital Formation
Capital formation is the process of accumulating resources, such as savings and investments, to fund new business ventures and
support economic growth. Entrepreneurship can encourage capital formation by attracting investment. In addition, the creation of
new businesses and the growth of existing firms can also contribute to the development of a more diverse and dynamic economy
that encourages capital formation and opens the door to a wide range of investment opportunities.
6. Elimination of Poverty
Entrepreneurship has the potential to lift people out of poverty by generating employment and stimulating economic activity.
Entrepreneurship also contributes to the development of local economies and helps improve the overall standard of living.
7. Community Development
Entrepreneurship promotes economic growth, provides access to goods and services, and improves the overall standard of living.
Many entrepreneurs also make a positive impact on their communities and improve their well-being by catering to underserved
areas and developing environment-friendly products. Their work can help build stronger, more vibrant communities and promote
social and economic development.

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Role of Entrepreneurship in Economic Development

8. Optimal Use of Resources

Entrepreneurship can help identify market opportunities and allocate resources in the
most effective way possible. Entrepreneurs also play a key role in developing innovative
products and services that meet the needs of customers while optimizing the use of
available resources.
9. Increases Gross Domestic Product (GDP): Entrepreneurship can contribute to
GDP by creating new businesses and industries, which can lead to job creation.

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Thanks

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