ENTREPRENEURSHIP

Course Objective: The aim of this course is to have a comprehensive perspective of

inclusive learning, ability to learn and implement the Fundamentals of Entrepreneurship.
Course Outcome: It enables students to learn the basics of Entrepreneurship and
entrepreneurial development which will help them to provide vision for their own Start-up.
Unit – 1: Entrepreneurial Perspectives:
Introduction to Entrepreneurship – Evolution - Concept of Entrepreneurship -
Types of Entrepreneurs - Entrepreneurial Competencies, Capacity Building for
Entrepreneurs. Entrepreneurial Training Methods - Entrepreneurial Motivations -
Models for Entrepreneurial Development - The process of Entrepreneurial
Development.
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 refers to the process of creating something new with value by devoting the necessary time
and effort, assuming the accompanying financial, psychical, and social risk and receiving the resulting
rewards of monetary, personal satisfaction and independence.

Definition of Entrepreneurship:

According to Fred Wilson: “Entrepreneurship is the art of turning an idea into a business venture capitalist”.

According to Stevenson & Jarillo: “Entrepreneurship is the process by which individual pursue opportunities
without regard to resources they currently control”.

According to Schumpeter, “Entrepreneurship is based on purposeful and systematic innovation. It included not
only the independent businessman but also company directors and managers who carry out innovative functions”.

In the opinion of A.H. Cole, “Entrepreneurship is the purposeful activity of an individual or a group of
associated individuals, undertaken to initiate, maintain or enhance the reputation (aggrandize), profit by
production or distribution of economic goods and services”.
Nature and 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 during 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.
Importance of Entrepreneurship:

a. Creation of Employment- Entrepreneurship generates employment. It provides an entry-level job, required for gaining
experience and training for unskilled workers.

b. Innovation- It is the hub of innovation that provides new product ventures, market, technology, and quality of goods, etc.,
and increase the standard of living of people.

c. Impact on Society and Community Development- A society becomes greater if the employment base is large and
diversified. It brings about changes in society and promotes facilities like higher expenditure on education, better
sanitation, fewer slums, a higher level of homeownership. Therefore, entrepreneurship assists the organisation towards a
more stable and high quality of community life.

d. Increase Standard of Living- Entrepreneurship helps to improve the standard of living of a person by increasing the
income. The standard of living means, increase in the consumption of various goods and services by a household for a
particular period.

e. Supports research and development- New products and services need to be researched and tested before launching in the
market. Therefore, an entrepreneur also dispenses finance for research and development with research institutions and
universities. This promotes research, general construction, and development in the economy.
ENTREPRENEUR

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.

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

WHO IS AN ENTREPRENEUR?

➢ An entrepreneur is a person who buys factor services at certain price with a view of selling its Products at uncertain price.
➢ Entrepreneur is an individual or associations and Entrepreneurs assemble and then integrate all the resources needed (the
money, the people, The Business model, there strategy) to transform an invention or an idea into a viable business.
Definition of Entrepreneur: According to Adam Smith: “Entrepreneur as a person who only provides capital without taking
active part in the leading role in the enterprise”.

Peter E Drucker defines an entrepreneur as one who always searches for change, responds to it, and exploits it as an opportunity.
Innovation is the basic tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or
service.
 CHARACTERISTICS OF ENTREPRENEUR

An entrepreneur may be driven by a need to create something new or build something tangible. Characteristics of an entrepreneur
include spontaneous creativity, the ability and willingness to make decisions in the absence of solid data and a generally risk-
taking personality.

1. Mental ability: Mental ability consists of intelligence and creative thinking. An entrepreneur must be reasonably intelligent
and should have creative thinking and must be able to engage in the analysis of various problems and situations in order to
deal with them.
2. Clear objectives: An entrepreneur should have a clear objective as to the exact nature of the goods to be produced and
subsidiary activities to be undertaken.
3. Business secrecy: An entrepreneur must be able to guard business secrets.
4. Human relations ability: The most important, personality traits contributing to the success of an entrepreneur is emotional
stability, personal relations, consideration, and tactfulness.
5. Communication ability: Communication ability is the ability to communicate effectively. Good communication also means
that both sender and the receiver understand each other and are being understood.
6. Technical knowledge: An entrepreneur must have a reasonable level of technical knowledge. Technical knowledge is the one
ability that most people can acquire if they try hard enough.
 SKILLS OF ENTREPRENEUR
Many entrepreneurs believe that the most important factor that will determine their level of success with a start-up relates to their
overall experience and skills in the niche area.

1. Ambition: It is easy to give up when the going gets tough, but the most successful entrepreneurs persist because of their
ambitious nature. They want to succeed, and they thrive on reaching small milestones that are steppingstones to their goal.

2. Willingness to Learn: Some people think that learning stops when you graduate college or earn a special certification, but this
is not the case. Education is a life-long process. Entrepreneur must stay updated with changes in technology, the evolution of
your industry, sales processes and more.

3. Ability to Listen: To manage a great team or run provide a great customer service if entrepreneur is an effective
communicator. Communication is a two-way street. To communicate outwardly in an effective manner, Entrepreneur must pay
attention to others’ motivations, hot buttons, interests and more. Entrepreneur also must be aware of non-verbal cues, such as
body language.

4. Creativity: If entrepreneur always do the same thing, you very likely will not enjoy new and better results. entrepreneur must
try new things to find what works best. He also needs to enrich their live with new experiences regularly.
5. Assertiveness and Confidence: While listening is important for effective communication, entrepreneur also must know
when he need to take control of the conversation and assert his opinions and beliefs. Entrepreneur should listen to others who
are making reasonable claims and requests, but he also need to know when to say no. Be consistent yet open-minded to earn
respect and trust from those around you.

6. Perseverance: Many of the most successful business owners have suffered devastating defeats and failures. Rather than look
at these events as an end to a situation, they have looked at these events as important learning moments. They maintained their
optimism and perseverance, but they also made calculated changes to future efforts. Remember that entrepreneur only fail when
they stop trying. Persistence is the key to success.

7. Courage and Risk Taking: In order to harness the power of creativity, entrepreneur must have the courage to act on their
great ideas and plans. While he need to research his ideas thoroughly, he must also have the courage to take an unknown step
and try things that are unfamiliar to him by accepting the risk .

Finding a successful path in life is rarely a straight and narrow process. Many entrepreneurs must take numerous steps to
develop the right combination of skills, traits, and knowledge to be successful with their efforts. If entrepreneur focus their
attention on nurturing these traits in your own life, they may be able to enjoy better overall success with future entrepreneurial
FUNCTIONS OF ENTREPRENEUR: An entrepreneur performs a series of functions necessary right from the
generation of an idea up to the establishment and effective operation of an enterprise. He carries out the whole set of
activities of the business for its success. The following are some of the functions of an entrepreneur.
1. UNDERSTANDING OWN CAPABILITY: Identify and compare own personal qualities and skills. Know own
strengths, weakness, and overall capability to translate idea into a business reality.
2. IDENTIFYING A NEW VENTURE OPPORTUNITY: Study market needs and wants for a change. Recognize
innovation possibilities and think about a new idea, process device, product, or service.
3. PLANNING A NEW VENTURE: Prepare a project report. Estimate technical know-how, plant, machinery, and
supporting services needed and know their suppliers. Know legal requirements for setting up a new unit.
4. ORGANISING A NEW VENTURE: Determine organizational structure. Ensure proper maintenance of office
records. Obtain certificate of registration. Arrange business location, factory shed, power and water supply. Engage
office staff and factory workers and secure patent and trademark rights, if necessary.
5. MANAGING FINANCE: Arrange own and borrowed capital. Avail grants and subsidies obtainable from government.
Maintain accounts and prepare, analyze the financial statements and control the performance.
6. MANAGING PRODUCTION OPERATION: Acquire details of basic technical knowledge and production
operation. Formulate framework for total quality control and guidelines for production schedule and ensure it.
7. MANAGING WORKFORCE: Arrange systematic manpower planning. Prepare job descriptions for all positions at
all levels. Decide pay and perquisites for each position and aassign responsibility and delegate authority.
8. MANAGING MARKET: Collect and regularly analyze data on customer desires with special reference to product
quality, function, pricing and after-sales service. Review marketing channel and ensure smooth flow of goods
Evolution of Entrepreneurship: The evolution of the concept of an entrepreneur or entrepreneurship is in
the following sequence,
1. Earliest Period: The earliest period of evolution of entrepreneurs marks the finest example of Marco Polo, by
acting as both merchant and explorer, he discovered trade routes to the far east and also entered into contracts
with various capitalists for the sale of his goods. Mostly, merchant-adventurer loans were found to be common
contracts during this period, wherein loan was offered at 22.5 percent interest rate which was inclusive of
insurance. The capitalist had a passive role as a risk bearer, while the merchant adventurer played an active
trading role holding the physical and the emotional risks.
2. Middle Ages : The word entrepreneur in the middle ages was used for an actor and a manager of large-scale
production projects. The manager of large-scale production projects was not subjected to any risks and was only
responsible to manage the projects with the help of available resources mostly being provided by the authorities of
the nation. A classic entrepreneur in the middle ages was the cleric. A cleric is a person who is a member of the
clergy of a religion, particularly a priest, preacher or a pastor. They were usually imposed by a responsibility of
giant architectures like castles, fortifications, public buildings, abbeys and cathedrals.
3. 17th Century: In the 17th century it was observed that individuals started entering into contracts
with the government either to provide service or produce the demanded products on the price fixed by
both the parties. In other words, the contract price was fixed. There were equal chances of either profit
or loss to the entrepreneur.
4. 18th Century: Differences were drawn between capitalists and the entrepreneurs in the 18th
century. In simple words, the individual who requires capital was distinguished from the individual who had
capital. Global industrialization was one of the major causes for this differentiation. The two significant
entrepreneurs of the 18th century were Eli Whitney and Thomas Alva Edison. Eli Whitney and Edison both of
them invented new technologies but were not in a position to finance them as they were lacking financial
resources.
5. 19th and 20th Centuries: Entrepreneurs in the 19th century and 20th century can be studied from
economic perspectives but not from managerial perspectives. In a nutshell, the entrepreneur manages and
controls an organization for one’s own self-interest and profit.
➢ He bears the expenditure for the essential raw materials which are required in the business, for the use of
land, for personal services and for the needed capital. He provided his own resources, skills and creativity
in planning, organizing and controlling the organization.
➢ He also holds up an assumption of possibility of loss and profit subjected to unavoidable and unexpected
conditions.
➢ Lastly, he keeps up with him the residual amount which is left over after making all the payments, which
is called as profit.
TYPES OF ENTREPRENEURS: Entrepreneurs can be of different types. Some may prefer to go it alone or share the risk in
groups with others. They are found in every economic system and as well as in other social and cultural activities. They are seen
from amongst farmers, labourers, fishermen, tribals, artisans, artists, importers, exporters, bankers, professionals, politicians,
bureaucrats and so many others.

Basing on the above features C. Danhof has broadly classified entrepreneurs into four types. These are discussed below.

1. Innovative Entrepreneur: In the early phases of economic development, entrepreneurs have initiative to start new ventures
and find innovative ways to start an enterprise. Thus, innovative entrepreneurs are those who introduces new products,
new method of production techniques, or discovers a new market or a new service or reorganizes the enterprise. It is the
innovative entrepreneurs who built the modern capitalism. They are commonly found in developed countries. They are
aggressive in nature who exhibit cleverness in putting attractive possibilities into practice.

2. Imitative Entrepreneur: There is a second group of entrepreneurs generally referred as imitative entrepreneurs. They usually
copy or adopt suitable innovations made by innovative entrepreneurs. They are adoptive and more flexible. They are
organisers of factors of production rather than creator. The imitative entrepreneurs are also revolutionary and important. They'
contribute to the development of underdeveloped economies.
3. Fabian Entrepreneurs: The third type of entrepreneur is Fabian Entrepreneurs. Such type of
entrepreneurs are very shy and lazy by nature. They are very cautious people. They do not venture to
take risks. They are rigid and fundamental in their approach. Usually, they are second generation
entrepreneurs in a family business enterprise. They follow the footsteps of their successors. They imitate
only when they are very clear that failure to do so would result in a loss of the relative position in the
enterprise.

4. Drone Entrepreneurs: The fourth type of entrepreneur is Drone entrepreneurs who refuse to copy or use
opportunities that come on their way. They are conventional in their approach. They are not ready to
make changes in their existing production methods even if they suffer losses. They resist changes. They
may be termed as laggards.

The above types of entrepreneurs are not comprehensive for it aims at highlighting the broad range of
entrepreneurs found in business and profession. Following are some more types of entrepreneurs listed
according to the type of business, use of technology, motivation, growth, and stages of development.
According to the Type of Business: Depending on the nature size, type of business, entrepreneurs are divided into five
categories. They are as follows:

Business Entrepreneur: Business entrepreneurs are those entrepreneurs who develop an idea for a new product or service
and then establish an enterprise to materialize their idea into reality.

Trading Entrepreneur: An entrepreneur who undertakes trading activities whether domestic or overseas is known as a
trading entrepreneur. He has to identify the potential market for his product in order to stimulate the demand for the same.
Industrial Entrepreneur: Industrial entrepreneurs are essentially manufacturers who manufacture products and services
which have an effective demand in the market .They can convert the economic resources and technology into a profitable
venture.

Corporate Entrepreneur: Corporate entrepreneur is one who through his innovative ideas and skill able to organize,
manage and control a corporate undertaking very effectively and efficiently.

Agricultural Entrepreneur: Agricultural entrepreneur is one who undertakes agricultural as well as allied activities in the
field of agriculture. He engages himself in raising and marketing of crops, fertilizers and other inputs of agriculture through
employment of modern techniques, machines and irrigation.
According to use of Technology: The entrepreneurs may be classified into the following categories on the basis of
application of new technology in various sectors of the economy.

Technical Entrepreneur: An entrepreneur who is technical by nature in the sense who is capable of developing new and
improved quality of goods and services out of his own knowledge, skill and specialization is called a technical
entrepreneur. He is essentially compared to a craftsman who concentrates more on production than marketing.

Non-technical Entrepreneur: Non-technical entrepreneurs are those who are mainly concerned with developing
alternative marketing and distribution strategies to promote their business. They are not concerned with the technical
aspects of the product and services they are dealing with.

Professional Entrepreneurs: Professional entrepreneurs are those who make it a profession to establish business
enterprises with a purpose to sell it once it is established. He is always looking forward to develop alternative projects by
selling the running business. He is not interested in managing and operations of the business established by him. He is very
dynamic in his attitude.
According to Motivation: Entrepreneurs basing upon their motivating factors can be classified into three types as
spontaneous, induced and motivated entrepreneurs.

Spontaneous Entrepreneurs: Spontaneous entrepreneurs are otherwise known as pure entrepreneurs who are motivated
by their desire for self fulfillment and to achieve or prove their excellence in job performance. They undertake
entrepreneurial activities for their personal satisfaction in work, ego, or status. Their strength lies in their creative abilities.
They are the natural entrepreneurs in any society. They do not need any external motivation.

Induced Entrepreneurs: Induced entrepreneurs are those who are induced to enter entrepreneurship because of various
governmental support provided in terms of financial assistance, incentives, concessions and other facilities to the people
who want to set up of their new enterprises. Sometimes prospective entrepreneurs are induced or even forced by their
special circumstance, such as loss of job or inability to find a suitable job according to their talent and merit to adapt to
entrepreneurship.

Motivated Entrepreneurs: Motivated entrepreneurs are those who are motivated by their desire to make use of their
technical and professional expertise and skill in performing the job or project they have taken up. They have enough
confidence in their abilities. They are highly ambitious and are normally not satisfied by the slow progress in their jobs.
Other Categories of Entrepreneurs

Solo Operators: Solo operators are those entrepreneurs who essentially work alone or have a few employees. In the
beginning, most of the entrepreneurs when start their enterprises perceive themselves like them.

Active Partners: Active partners are basically solo operators who start an enterprise as a joint venture. It is important that
all of them actively participate in the business of the firm.

Partners: There are certain entrepreneurs who only contribute funds to the enterprise without actively participating in
various activities of the firm are known as simply partners.

Inventors: There are some entrepreneurs whose chief competence is their creativity and inventiveness to invent new
product are called as inventors. heir interest is basically in research, and they often-lack managerial experience.

Challengers: These are the entrepreneurs who get into the business because of the challenge it represents. They tend to
get bored when it seems that challenges are met and doing well. Then they begin to search for newer challenges.

Life-timers: Life-timers are those entrepreneurs who see their business as an integral part to their life. It is a matter of ego
satisfaction and personal concern of life-timers to run the business successfully. Family enterprises and business come in
this category.
Buyers: Buyers are those entrepreneurs who tend to purchase business rather than start one themselves as it appears to them to
be less risky alternative. They do not like to bear much risk.

Growth Entrepreneurs: These are the entrepreneurs who always take up high growth industries which have substantial
growth prospects in future. Such entrepreneurs grow with the growth of industries and vice-versa.

Super-Growth Entrepreneurs: Entrepreneurs who have shown tremendous growth performance in their enterprise are called
as super-growth entrepreneurs. The growth performance of enterprise is characterized by liquidity of funds, profitability and
gearing.

First-Generation Entrepreneurs: These entrepreneurs start their industrial unit by means of their own innovative skill and
expertise. They usually combine different technologies to produce marketable products or services for the consumers.

Classical Entrepreneurs: A classical entrepreneur is a stereotype entrepreneur who is concerned with the customers and
marketing needs through a development of a self- supporting venture.

Modern Entrepreneurs: Modern entrepreneurs are those who undertake ventures which run smoothly along with the
changing demand of the products or service in the market. They also take up such ventures which suit the current marketing
needs of the consumers.
Inherited Entrepreneurs: Inherited entrepreneurs or entrepreneurs by inheritance are seen in India where entrepreneurs inherit
the family business through succession and pass it from one generation to another.

Forced Entrepreneurs: Sometimes circumstances compel persons to accept entrepreneurial activities, even if they lack proper
understanding and training in the respective field. They are known as forced entrepreneurs. Unemployed youth/job seekers, rich
farmers are few examples of such category.

Women Entrepreneurs: Women or female entrepreneurs are those section of the female population who venture out into
industrial activities in the field of manufacturing, assembling, job works, repairs/servicing and other business. The women take
the lead, organize and manage the business or industry and help in providing employment to others.

Rural Entrepreneurs: Rural entrepreneurs are those who want to carry out their entrepreneurial activities in the rural and
backward sector of the economy. They set up their enterprises in rural areas.

Urban Entrepreneurs: Urban entrepreneurs are those who establish their enterprises in the urban or developed sector or the
economy and carry out their entrepreneurial activities more successfully than the rural entrepreneurs.

Besides the above types of entrepreneurs, a large number of other types of entrepreneurs are also seen in the economy who have
established their business undertakings and perform entrepreneurial activities successfully. They are retail entrepreneurs,
services entrepreneurs, large scale entrepreneurs, traditional entrepreneurs, skilled, national, international, bureaucratic
entrepreneurs and many more.
 Entrepreneurial Competencies
Entrepreneurial competencies have been defined as the knowledge, skills, abilities, values, attitudes,
personality and expertise that lead to entrepreneurial action and success.

According to Bride (1995): Entrepreneur competency can be defined as underlying characteristics such
as generic and specific knowledge, motives, traits, self images, social roles and skills that result in
venture both survival and growth.

Types of competencies the competencies may be classified into the following categories
1. Personal entrepreneurial competencies
2. Venture initiation and success competencies
a. Eenterprise launching competencies
b. Eenterprise management competencies
1. Personal and entrepreneur competencies : It is the personal characteristics of an individual who’s
process to perform the task effectively and efficiently personal entrepreneurial competencies including the
following
i) Initiative: The entrepreneur should be able to take action that go beyond his job requirements and to act
faster. he's always ahead of others and able to become a leader in the field of business he does things before
being asked or compiled by the situation and acts to extend the business into new areas, products and
services.
ii) Sees and Acts on Opportunities: Looks for and takes action on opportunities. Sees and acts on
opportunities (business, educational or personal growth). Seizes unusual opportunities to obtain financing,
equipment, land, workspace or assistance.
iii) Persistence: Takes repeated action to overcome obstacle that get in the way of reaching goals.
➢ Takes repeated or different actions to overcome obstacles:
➢ Takes action in the face of a significant obstacle.
iv) Information Seeking: Takes action on own-to get information to help reach objectives or clarify problems.
➢ Does personal research on how to provide a product or service.
➢ Consults experts for business or technical advice.
➢ Seeks information or asks questions to clarify what is wanted or needed
➢ Personally, undertakes research, analysis, or investigation.
➢ Uses contacts or information networks to obtain useful information.
v) Concern for High Quality of Work: Acts to do things that meet or beat existing standards of excellence.
➢ States a desire to produce work of high quality.
➢ Compares own work or own company's work favorably to that of others.
vi) Commitment to Work Contract: Places the highest priority on getting a job completed.
➢ Makes a personal sacrifice or expends extraordinary effort to complete a job
➢ Accepts full responsibility for problems in completing a job for others.
➢ Pitches in with workers or works in their place to get the job done.
➢ Expresses a concern for satisfying the customer.
vii) Efficiency Orientation: Finds ways to do things faster or with fewer resources or at a lower cost.
Looks for or finds ways to do things faster or at less cost. Uses information or business tools in improve
efficiency Expresses concern about costs vs. benefits of some improvement, change, or course of action.
viii) Systematic Planning: Develops and uses logical, step-by-step plans to reach goals.
➢ Plans by breaking a large task down into sub-tasks.
➢ Develops plans that anticipate obstacles.
➢ Evaluates alternatives.
➢ Takes a logical and systematic approach to activities.
ix) Problem Solving: Identifies new and potentially unique ideas to reach goals. Switches to an alternative
strategy to reach a goal. Generates new ideas. or innovative solutions.
x) Self-Confidence: Has a strong belief in self and own abilities. Expresses confidence in own ability to
complete a task or meet a challenge. Sticks with own judgement in the face or opposition or early lack of
success.
xi) Assertiveness: Confronts problems and issues with others directly. Confronts problems with others
directly.
xii) Persuasion: Successfully persuades others. Convinces someone to buy a product or service. Convinces
someone to provide financing. Convinces someone to do something else that he would like that person to do.
 2. Venture initiation and success competencies : In addition to personal competencies entrepreneur must
also process the competencies required to launch the enterprise and for its growth and survival these
competencies further divided into 2 categories
a. Enterprise launching book competencies
b. Enterprise management competencies
a. Enterprise launching competencies:
➢ Competencies to understand the nature of business
➢ Competencies to determine the potentiality as an entrepreneur
➢ Competency to develop a business plan
➢ Competency to obtain technical assistance
➢ Competency to choose the type of ownership
➢ Competencies to plan the marketing strategy
➢ Competencies to locate the business
➢ Competencies to finance the business and to deal with the business
➢ Competencies to compile with government regulations
 b. Enterprise management competencies
➢ Competency to manage the business
➢ Competencies to manage human resources
➢ Competencies to promote the business
➢ Competencies to keep the business records
➢ Competencies to manage the finance competencies to manage the customer credit and collection

Capacity Building for Entrepreneurs

Capacity-building is defined as the process of developing and strengthening the skills, instincts, abilities, processes
and resources that organizations and communities need to survive, adapt, and thrive in a fast-changing world.
Capacity building to cover human resources development and the strengthening of managerial systems,
institutional development that involves community participation and creation of an enabling environment.
Capacity building in the context of development implies a dynamic process which enables individuals and
agencies to develop the critical social and technical capacities to identify and analyze problems as well as
proffer solutions to them.
Entrepreneur capacity building involves developing the combination of all four capacity elements, to provide
the ingredients for a great entrepreneurial success soup.
To be a successful entrepreneur, individuals must build capacities in four key strategic areas – Operational,
Management, Financial Management, and Personal capacities. Some of these capacities are gained through
experience throughout our career, while others are learned through educational avenues. Some successful
entrepreneurs are born with strong personality traits, and some behaviors are strengthened through learned
responses in the business environment.
Here are the four key categories of capacity building leading to the development of successful entrepreneurs.
Operational Capacity Building
Having a brilliant understanding of an industry and business at ground level builds operational capacity. This of
course involves working in a variety of business operations for a period prior to diving into entrepreneurship. This
is where we gain valuable insight into what makes businesses tick. Understanding the dynamics on the floor, in the
cubicles, in the field and out on the road, gives you the perspective on how to lead, organize and plan for
operations.
Management Capacity Building: Taking operational experience one more step, gaining management experience in a field or
business will be directly applicable to managing the own business. The valuable experience we gain managing operations,
resources and people will give us the applicable tools for our own business. With a few years of management experience, you
will gain management capacity and an understanding of responsibilities and accountabilities at that level… all precursors to
managing your own company.
Financial Management Capacity Building: Through a combination of work experience and education, we need to be well-
grounded and versed in managing finances. we need to be able to accurately estimate and build financial statements and to
understand them. With gained skills, we need to be able to analyze financial statements, looking at trends and indicators and
what those all mean to our business. Financial reports provide key indicators and information on the business’ financial
health…there is a wealth of information in the financial statements. Other parties, partners and financial institutions will be
looking at you and your organization’s ability to manage finances.
Personal Capacity Building: Of extreme importance, if we don’t have some key personal, entrepreneurial traits we may be
closing shop fast. Some people are born with strong traits while other behaviors can be picked up along the development
pathway. Demonstrating strong traits and behaviors such as dedication, perseverance, ambition, determination, strong-will,
openness, honesty, transparency, fairness, etc may move us along the pathway to become a successful entrepreneur.
Capacity Building for Entrepreneurs in India the entrepreneurs with managerial mindset require business they
are the one who can develop the nation, a country cannot develop until the creates wealth and to create wealth the
economy must create jobs and job creation is possible through entrepreneur activity. For all this is happen support to
regulatory environment should be created venture capital activity must be carried out and strong capital market
should be established the following 5 areas must be focused to build an entrepreneur capacity
1. Building skills : An important part of entrepreneurship is experimental learning entrepreneur must develop 5
important skills that is personal skills, leadership skills, communication skills, sales skills and negotiation skills.
Indian education system should make sure that curriculum in universities colleges and schools is a design to
meet business needs it also established to pull centres of entrepreneur. Excellency in institution that support
entrepreneurship
2. Creating the right eco-system : Eco-system is a system in which the stakeholders interconnected with each
other the stakeholders include institutions and individuals. The linkage of individuals in ecosystem will lead to
different production and spread of usual useful knowledge very important. To boost and enhance the ecosystem
institutional support system incubators venture capitalist government schemes are the components of ecosystem
for commercialization.
4. Providing access to the capital : Since, a long time the entrepreneurs of India are facing the problem of
insufficient capital, but the success of new business crucial to determine capital requirement, design fund
raising, financial strategies and handle the financial process the policy of the government should be alternative
to venture capitalist, foreign investors, Angel investors financial institutions etc., so that they make investment
in new ventures.
5. Provide incentives tax benefits and simplify the bureaucrat process : Tax rates can be reduced to
encourage the entrepreneurship to carry out their entrepreneurial activities effectively to keep the earning
without paying much taxes, one way to give incentives to entrepreneurs is to reduce legal costs to hiring
Bureaucratic process should be simplified by reducing the government mandated paperwork at different points
while operating the business.
 Entrepreneurial Training and Methods of Entrepreneurial Training
What is Entrepreneurial Training ?
Training aimed at developing entrepreneurial competence in potential individuals is called entrepreneurial
training.
According to Cope and Kat: Entrepreneurship training is a structured program that aims to equip
participants (entrepreneurs) with the necessary skillset and mindset for identifying and launching
new business ventures.
We are conscious that entrepreneurship is regarded as one of the four major factors of production, the other
three being land, labour and capital. The most understandable example of entrepreneurship is the starting of
innovative businesses.
Entrepreneurship training provides individuals with the aptitude to identify business opportunities,
self‐esteem, knowledge and skills to act on them. It includes instruction in chance identification,
commercializing a concept, managing resources, and initiating business speculation.
Objectives of Entrepreneurial Training : The main objectives of entrepreneurial training are enlisted below
1.To encourage new venture establishment and expansion of the existing ones in rural areas through designing
especial programmes.
2.To inculcate the entrepreneurial skills to potential entrepreneurs and help develop the same in existing
entrepreneurs.
3.To enable the entrepreneurs to define or redefine their business objectives and work individually as well as in
group for the realization of the same.
4.To make the entrepreneurs ready for unforeseen threats and risks associated with the business.
5.To facilitate strategic decision making among entrepreneurs.
6.To inculcate team building and coordination skills for meeting the future demands.
7.To develop the communications skills among the potential entrepreneurs.
8.To make the potential entrepreneurs able to define the vision of their ventures and work in coordination for the
realization of the same.
9.To make the potential entrepreneurs able to analyse the environment around them and take suitable decisions
about the product.
10.To make the potential entrepreneurs. understand the legal procedures and norms involved establishing a new
venture and the basics of industrial relations among potential entrepreneurs.
11.To encourage the spirit of self-employment among entrepreneurs and develop small and medium enterprises.
Methods of Entrepreneurial Training : Various methods of providing training to the entrepreneurs are as follows :
1) Lecture Method : As the name suggests, lecture method involves providing information to the trainees orally. In
case of any doubt arising in the minds of trainees, clarification can be given spontaneously by the instructors.
2) Written Instructional Method : When the training contents are to be used in the future by the trainees, this
method is used, and it is most popular in case of standardized production system.
3) Individual Instruction : In this method, only one person is chosen for providing entrepreneurial training. When a
tough skill is to be imparted in the candidate, this type.of training becomes very useful.
4) Group Instruction : When the training is to be provided to the group of different individuals, this method is
adopted particularly when these persons have to perform the same type of activities and similar instructions are to be
given to all the candidates.
5) Demonstration Method : This method is mainly useful when the physical exposure is to be imparted by the
trainer. In this method, the main focus is on providing practical knowledge rather than theoretical knowledge.
6) Meetings : This method of training mainly involves the group of people to discuss the different issues faced by
them. They share their views, ideas and different conclusions are drawn on the basis of various alternatives and
suggestions.
7) Conference : This method is generally used for imparting knowledge regarding new ideas and techniques to the
trainees. Here, conferences are organised and experts from different fields are called to share their knowledge and
experiences useful for the trainees.
 Entrepreneurial Motivations
Motivation is the driving force within people that get them to act in the ways they do. Entrepreneurial
motivations are necessary steps of getting individuals to become entrepreneurs.
The entrepreneurial motivation is the process that activates and motivates the entrepreneur to exert
higher level of efforts for the achievement of his/her entrepreneurial goals. In other words, the
entrepreneurial motivation refers to the forces or drive within an entrepreneur that affect the direction,
intensity, and persistence of his / her voluntary behaviour as entrepreneur. So, to say, a motivational
entrepreneur will be willing to exert a particular level of effort (intensity), for a certain period of time
(persistence) toward a particular goal (direction).

Definition: Motivation is regarded as “the inner state that energizes activities and directs or channels
behavior towards the goal”. Motivation is the process that arouses action, sustains the activity in progress and
that regulates the pattern of activity.
➢ Men and women who have a perception of self-efficacy and are yet to feel interested in or motivated by the
idea of being on their own comprise a potential, future source of entrepreneurship.
What motivates a person is a question easier asked was driven by the desire to utilize his discovery of the
molecule as a business opportunity. In terms of Maslow’s need hierarchy theory, Since entrepreneurial
situation is characterized by personal accomplishment in competitive situations and involving higher standards
of excellence, one often come across reference to ‘need for achievement’.
Need for Achievement : Need for achievement implies a desire to accomplish something difficult. To
master, manipulate, or organize physical objects, human beings or ideas. To do this as rapidly and as
independently as possible. To overcome obstacles and attain a high standard. To excel oneself. To rival and
surpass others. To increase self–regard by successful exercise of talent. Yes, entrepreneurship provides with the
best opportunity for making the best use of our talents as in employment the 9-5 routine, pressure to adhere to
rules and regulations, preference for compliance of boss’s instructions over the use of personal creativity and
innovativeness stifles our progress and self-development. we can create a work environment that suits our
abilities and interests.
Need for Power : Need for Power is the concern for influencing people or the behavior of others for moving in the chosen
direction and attaining the envisioned objectives. In common perception, politicians, social religious leaders Chief Executive
Officers (CEOs), Government Bureaucrats/Civil Servants typify the need for power. Such a perception seems more based on the
belief that the source of power lies in the “position” a person occupies in organizational/societal context. In the same manner,
business ownership too may imply a need for power. Moreover, we would appreciate that the process of founding a business, one
must win the commitment of capital providers. Power may not be used to further one’s self- interests alone, it may be also be used
to touch the lives of others, to make a difference. Entrepreneurs driven by this socialized face of the need for power. They
found organizations that are a source of sustenance and self- respect for many.
Need for Affiliation : If a man thinks about interpersonal relationships, he has a concern for affiliation. It implies, among other
things a tendency of the people to conform to the wishes and norms of those whom they value. Apparently, social activists,
environmentalists, teachers, and doctors and nurses may seem as predominantly driven by these needs. Entrepreneurs are believed
to be low on affiliation, as they are and expected to be, innovative, trendsetters and tradition breakers. However, it is not necessary
that affiliation should only interfere with achievement. In the countries with the colonial past, such as ours, the first generation of
entrepreneurs in Independent India was driven by patriotic fervor and the desire to rebuild the economy left stagnated by
the alien rulers. One can certainly trace some elements of affiliation motivation in such instances.
Need for Autonomy: The need for autonomy is a desire for independence and being responsible and accountable to
oneself rather than some external authority for performance. It is the desire for an opportunity for the fullest
expression of one’s abilities. In the context of entrepreneurship, it is usually interpreted as the determination
not to work for someone else. In most job situations, employees are given little freedom to exercise their discretion
in taking decisions and choosing a course of action so much so that absence of it drives them into starting their own
ventures.
In explaining and developing entrepreneurial motivation, it is important to learn that different individuals are
motivated differently, and that one may be trying to satisfy more than one need through one’s pursuit. This is an
important observation as economic theory very simply says that the objective of the firm or that of the
entrepreneur is profit maximization.
Some of the most important factors behind entrepreneurship are −
1.A desire for applying innovative thoughts
2.A desire for independent functioning
3.A desire for financial independence
4.A desire to achieve personal goals
Entrepreneurial Motivating Factors: Most of the researchers have classified all the factors motivating
entrepreneurs into internal and external factors as follows:
Internal Factors: These include the following factors:
a. Desire to do something new.
b. Become independent.
c. Achieve what one wants to have in life.
d. Be recognized for one’s contribution.
e. One’s educational background.
f. One’s occupational background and experience in the relevant field.
External Factors: These include:
a. Government assistance and support.
b. Availability of labour and raw material.
c. Encouragement from big business houses.
d. Promising demand for the product.
The 6Cs that motivate entrepreneurs to establish their own business are as follows:
1. Change – Entrepreneurs frequently want change, not only change, but they also want to be the bearers of
change. They are solution givers and want to interrupt the status quo. They have a vision like "I want to
assemble the world's information" or "I want to put an AC at every desk" and they take an attempt to make this
change. In this attempt, some succeed and some fail.
2. Challenge – Some people love challenges, and they opt for starting a new business as it is very challenging
to handle big problems. These people find typical job in a big corporate as boring and not challenging enough.
3. Creativity – Running one‘s own business is all about being more creative and having the independence to
make new discoveries. One needs to have an infinite room to welcome, introduce creativity in a small business.
4. Control – Some people tend to start a business because they don't want to be pushed around and work for a
product/company in which they have no way to shape their destiny. They want to be their own boss having their
own time, own pace, location of their choice, employees of their choice and have a progressive role in deciding
the direction of the company.
5. Curiosity - Successful entrepreneurs are always anxious and ask - "what if we do X this way?” They want to have
more than one option to do a work and choose the best one from them. They want to understand the customer's
perceptions, point of views, markets and competitors. They are frequently anxious to see how their theory like
"people want to do A with B" works
6. Cash – The last but not the least part is the cash. Money says it all. Many non-entrepreneurs have a misconception
that cash comes first for entrepreneurs, but this is never really true. If this would be the case, then there is no reason
for an Ellison or Gates to keep expanding their business aggressively after they have made more than billion dollars.
However, money is not the primary motivation.
Results of Motivation: Successful entrepreneurship needs determination, freedom, discipline, connectivity and
an abundance of skills in planning. People with a complete package of physical strength combined with
perseverance, mental strength, and self-discipline have the passion and urge to succeed.
 Motivation Theory of Entrepreneurship
Various researchers are actively engaged in finding answer to one basic question i.e. what motivates people? Or
what makes them work ? Various theories have been propounded by different experts to focus attention on this basic
issue.
Some of the theories which are prominent and relatively more relevant to entrepreneurship are as under:-
I. MASLOW’S NEED HIERARCHY THEORY Maslow’s theory is based on human needs. He developed a
conceptual framework for understanding human motivation. He was of the opinion that every individual has a
complex set of exceptionally strong needs and the behaviour of an individual at a particular moment of time is
usually determined by his strongest need.
➢ He defined a person’ effectiveness as a function of matching man’s opportunity with the appropriate position of
hierarchy of needs. Process of motivation begins with the assumption that the behaviour, at least in part, is
directed towards the achievement or the satisfaction of needs.
➢ Maslow felt that the ‘needs have a definite sequence of domination. Second need does not dominate till first need
is reasonably satisfied and third need does not dominate until first two needs have been reasonably satisfied of
needs.
Second need does not dominate till first need is reasonably satisfied and third need does not dominate until first
two needs have been reasonably satisfied. Man in never fully satisfied, if one need is satisfied the other will arise and
so on. Once a need or certain order of needs is satisfied, it ceases to be a motivating factor. Maslow stated that
human beings have five basic levels of needs, which they tend to satisfy in a hierarchical manner.
These five needs can be discussed as follows :
(i) Physiological Needs: These needs are basic and are related to survival and maintenance of life. These needs
comprise of food water, air, shelter, clothing and other necessities of life. The first priority of human beings is to
acquire these basic necessities of life and then move to second level of needs.
(ii) Safety and Security Needs: After satisfying physiological needs, human beings aim at satisfying safety and
security needs. Human beings are not content with just satisfying present physiological needs, they want to make
provision for the same for future also. They want job security, personal body security, security of source of income,
provision for old age, insurance against risks etc. Entrepreneurs just like other human beings are guided by all
these factors.
(iii) Social Needs: Man is a social animal and wants to belong to a social group where his social and emotional needs
for love, affection, warmth and friendship are satisfied. An entrepreneur too is interested in conversion, exchange
of feelings and grievances with fellow entrepreneurs, his employees and others. He wants to belong to others
and expects that others should belong to him i.e. the feeling of belongingness.
(iv) Esteem Needs: These needs include self respect, self confidence, recognition, appreciation, prestige, power &
control These are also known as egoistic needs and affect prestige and status of individuals. Entrepreneur derives
status and respect through their ownership and control over their business.
(v) Self-actualization or Self fulfillment needs: This is the ultimate goal and involves realizing one’s potentialities
for continued self development. After other needs are fulfilled, a man has the desire for personal achievement. He
wants to do something which is challenging and since this challenge gives him enough push and initiative to work It
is beneficial to him and the society. The sense of achievement gives him psychological satisfaction. An entrepreneur
can achieve self actualization in being a successful entrepreneur.
II. MCCLELLAND’S THREE NEED MODEL : According to David McClelland, “a person acquires three
types of needs as a result of one’s life experience. He tends to develop certain motivation drives as a result of
his interaction with the environment in which he lives.
These three needs are: 1. Need for achievement. It is a drive to excel, advance and grow. This refers to one’s
desire to achieve something with own efforts. People with a high need for achievement derive satisfaction
from achieving goals. These people are often wealthy, and their wealth comes from their ability to achieve
goals. High achievers want immediate feedback on their performance, and they generally undertake tasks of
moderate difficulty rather than those which are either very easy or very difficult. These people prefer to work
independently so that successful task performance can be linked to their own efforts rather than to someone
else’s McClelland and his associates made specific suggestions for the development of achievement need and
these are –
(i) Give employees periodic feedback on performance. This will provide information that will enable them to
modify or correct their performance.
(ii) Provide good models of achievement. Employees who are successful should be made available for others to
emulate.
(iii) Arrange tasks so that employees can pursue moderate challenges and responsibilities. Avoid tasks that are either
very difficult or very easy.
(iv) As much as possible employees should be able to control their own destiny and imagination. They should be
trained to think realistically and positively about how they will accomplish goals
2. Need for power: A drive to influence others and situations. It refers to one’s desire to influence and dominate
others through use of authority. Achievement of goals is less important than the means by which goals are
achieved. Alfred Adler was leading advocate of power motive. He propounded the concept of inferiority
complex and compensation. According to him the individual’s lifestyle is characterized by striving to
compensate for the feeling of inferiority which are combined with innate drive for power. As such there arises
need to manipulate others or there is drive for superiority over others McClelland and his associates have found
that people with high power need have a great concern for exercising influence and control. Such type of people
generally seeks positions of leadership and is forceful, outspoken, hardheaded and demanding.
3. Need for affiliation: A drive for friendly and close interpersonal relationships. It refers to one’s desire to establish
and maintain friendly relationship with others. People with affiliation need derive satisfaction from social and
interpersonal activities. Affiliation plays a very vital role in human habaviour. McClelland has suggested that people
with high need for affiliation usually derive pleasure from being loved and tend to avoid pain of being rejected.
These individuals are concerned with maintaining pleasant social relationship, enjoying a sense of intimacy and
understanding and enjoy assisting or helping others in trouble. People possess the above needs in varying degrees
and these needs may be simultaneously acting on an individual. In case of entrepreneurs, need for achievement is
more dominating.
McClelland is of the opinion that people with high need for achievement are characterized by the following:
(i) They set moderate, realistic and attainable goals for them and take calculated risks and look for challenging tasks.
(iii) They prefer situations where in they can take personal responsibility for solving problems.
(iv) They need concrete feedback on how well they are doing.
(v) Their need for achievement exists not merely for the sake of economic rewards or
social recognition rather personal accomplishment is intrinsically more satisfying to them.
Achievement Motivation Theory of Entrepreneurship
What is the achievement motivation theory of entrepreneurship?
Harvard psychologist David McClelland developed the Achievement Motivation Theory in his book entitled The Achieving
Society in 1967. McClelland sought to explain why some societies are more economically successful than others. For answers,
he looked at the entrepreneurial behaviors of individuals, which he thought were key to the development of all economies.
According to McClelland, entrepreneurs do things in a new and better way and make decisions under uncertainty.
Entrepreneurs are characterized by a need for achievement or an achievement orientation, which is a drive to excel,
advance, and grow. By focusing in on a particular need, he was able to challenge the then prevailing great man theory of
entrepreneurship as well as religious theories of entrepreneurship. He believed that entrepreneurship is learned and that such
learning can be encouraged fruitfully.
Need for achievement: The need for achievement contrasts with the need for power—that is, a drive to dominate others in all
situations, and with the need for affiliation—that is, a drive for close personal relationships. However, power and affiliate
legitimacy may help with achievement and can thus be considered valuable means or resources that can help to satisfy the need
for achievement.
McClelland believed that an achievement orientation develops during middle childhood through family socialization
emphasizing high standards, self-reliance, and less dominant fathers. It manifests in behaviors such problem-solving, feedback
seeking, goals attainment, and risk-taking.
McClelland argued that the need for achievement is partially culturally determined with some societies producing fewer
individuals with achievement orientations. Societies lacking in achievement-oriented individuals are expected to have lower
average incomes.
 Entrepreneurial Development - The process of Entrepreneurial Development.

Entrepreneurship Development
➢ Entrepreneurship development is basically the process of improving the skill set as well as the knowledge
of the entrepreneurs. This can be done through various methods such as classroom sessions or training
programmes specially designed to increase the entrepreneurial acumen.
➢ Entrepreneurship development is the means of enhancing the knowledge and skill of entrepreneurs
through several classroom coaching and programs, and training. The main point of the development
process is to strengthen and increase the number of entrepreneurs.
➢ This entrepreneur development process helps new firms or ventures get better in achieving their goals,
improve business and the nation’s economy. Another essential factor of this process is to improve the
capacity to manage, develop, and build a business enterprise keeping in mind the risks related to it.
➢ In simple words, the entrepreneurship development process is about supporting entrepreneurs to
advance their skills with the help of training and coaching classes. It encourages them to make better
judgments and take a sensible decision for all business activities.
Process of Entrepreneurship Development
The below-mentioned steps will illustrate how to build an effective entrepreneurship development program for
an entrepreneur to organize and launch the new ventures.
•Discover – Any new process begins with fresh ideas and objectives, wherein the entrepreneur recognizes and
analyzes business possibilities. The analyzing of opportunities is a risky task, and an entrepreneur looks out for
inputs from other persons, including channel partners, employees, technical people, consumers, etc. to reach an
ideal business opportunity.
•Evaluation – The evaluation of an opportunity can be done by asking several questions to oneself. For
instance, questions like whether it is worth taking a chance and investing in the idea, will it attract the
consumer, what are the competitive advantages and the risk linked with it are asked. A reasonable and sensible
entrepreneur will also analyze his skills and whether it matches his entrepreneurial objectives or not.
•Developing a plan – After the identification of an opportunity, an entrepreneur has to build a complete
business plan. It is the most important step for new business as it sets a standard and the assessment criteria and
sees if a company is working towards the set goals.
•Resources – The next step in the process of entrepreneurial development is resourcing. Here, the entrepreneur recognizes the
source of finance and from where the human resource can be managed. In this step, the entrepreneur also tries to find investors for
his new business.
•Managing the company – After the hiring process and funds are raised now its time to start the operation to accomplish the
desired goals. All the entrepreneur will decide on the management structure that will be assigned to resolve the operational
problems whenever it occurs.
•Harvesting – The last step in this process is harvesting, where an entrepreneur determines the future growth and development of
the business. Here, real-time development is compared with the projected growth, and then the business security or the extension is
initiated accordingly.
 Models for Entrepreneurial Development
Different degrees or levels of entrepreneurial intensity and drive depend upon how much independence one exhibits, the
level of leadership and innovation they demonstrate, how much responsibility they shoulder, and how creative they
become in envisioning and executing their business plans. By identifying what level you’re in, and what level you want
to be on, you will be able to adjust your actions and mindset to bring out the full potential of
entrepreneurship.
Five Levels of Entrepreneurial Development
LEVEL 1: The Self-Employed Mindset: The first level pertains to self-employed persons who desire to have greater
control over their lives, careers, and destinies by independently braving their own path into business. They believe that
they could do their job just as well without an employer – and perhaps, without the need for other employees. They want
more autonomy. They want to do things their own way.
LEVEL 2: The Managerial Perspective: The second level, in contrast to the first mindset, has a greater position to
succeed as an entrepreneur because of the belief that business is all about managing people. Managers who become
leaders succeed because they accept the challenge and responsibility of ensuring that others under their wings also
succeed and flourish. By getting the most out of employees, managers themselves are able to delegate aspects of their
business to others and set higher goals.
LEVEL 3: The Attitude of Owner/Leader: The third level relates to entrepreneurs who have become an owner or
leader of a business with a well-established organization.
This entrepreneur enjoys remarkable benefits by knowing how to step aside and let the business – and those
employees working in it – operate as a profit center that is not reliant upon the owner’s constant hands-on
participation. This kind of entrepreneur has created an organization that is more self-sufficient and self-sustaining.
LEVEL 4: The Entrepreneurial Investor: The fourth level is all about entrepreneurs who are investing and
managing their money to produce more money and to elevate the business. Franchising is one of the key tools of
those who are in this level of entrepreneurial mindset.
➢ By franchising the original venture or buying up other healthy businesses, the investor can get into the career of
not just selling basic products and services, but of selling entire businesses.
➢ So rather than remaining at the helm of these companies, the investor will buy them, ensure that they have
valuable equity or attractive allure and potential, and then sell them to other entrepreneurs or would-be
entrepreneurs. The focus becomes finding, buying, and perhaps refurbishing, businesses.
LEVEL 5: The True Entrepreneur: The fifth and last level pertains to an entrepreneur who turns goals and
dreams into reality and who earns through extensive passive income. These people profit in all situations and
add to their wealth by acquiring more profit centers, more paper assets, and more entrepreneurial power.

❖ The true entrepreneur uses a four-step approach to thinking: from 1) idealization of dream and 2)
visualization of goals to 3) verbalization of the vision and 4) materialization of the dream.
➢ Idealization involves imagining ideal world dreams while visualization is all about picturing the ideal
world as a reality in order to work on goals. Verbalization pertains to putting the dream and the vision into
words and materialization is when that dream becomes real and tangible.

Having learned new things every step of the way and evolved through various stages of entrepreneurial
accomplishment and insight, true entrepreneurs reach the ultimate goal and realize one’s dreams in a life-
changing way.
ENTREPRENEURIAL Development Models
The models suggested for the development of entrepreneurship fall in the following categories.
(a) Psychological models
(b) Sociological models
(c) Integrated models
(a) Psychological Models McClelland (1961) has given a significant lead in identification of determinants of
entrepreneurship. In his model. he describes more importance to achievement motives, which earlier related to
child-rearing practices. But in his recent book with D.G. Winter. he has altered his earlier proposition on the
importance of child rearing as the intrinsic determinant of the achievement motive. Now, change in motivation
is seen primarily as a result of the ideological arousal of the latent need for achievement among adults. After
identifying achievement orientation as the key variable in the development of entrepreneurship. McClelland
suggest motivation training programme as the policy measure, which will make entrepreneurs willing and eager
to exploit the new opportunities provided.
❖ Everett Hagen's theory of social change lays emphasis on "creative personality" as a casual link in
entrepreneurial behaviour and "status withdrawal" as the determinant of the creative personality. Hagen
elaborately explains causal sequence of entrepreneurial behaviour. But his model of entrepreneurship fails to
give any policy variable for the development of entrepreneurship. Status withdrawal would occur in the natural
evolutionary process of the society and not by any deliberate attempt.
❖ John Kunkel (1965) considered entrepreneurial supply by suggesting a behaviorist model. His model suggests
that entrepreneurial behaviour is a function of the surrounding social structure, both past and present, and can
really be influenced by manipulating economic and social incentives. Thus, Kunkel's model is based upon
experimental psychology, which identifies sociological variables as the degeminates of entrepreneurial supply.
(b) Sociological Models : Frank W. Young's theory of entrepreneurship is a theory of change based upon society’s
incorporation of relative sub-groups. The relativeness of a sub-group which has a low status in a larger society will
lead to entrepreneurial behaviour if the group has bitter institutional resources than others in the society at the same
level. Young's model of entrepreneurship suggests the creation of supporting institutions in society as the
determinant of entrepreneurship.
c) Integrated Models
T. V. Rao (1975) in "entrepreneurial disposition" has included the following factors.
I. Need for motive is the dynamic which. for the prospective entrepreneur. has the greatest possibility
of achieving the goals if one performs those activities.
II. Long- term involvement is the goal either at thinking level or at activity level in entrepreneurial
activity that is viewed as a target to be fulfilled.
III. Personal, social and material resources which, he thinks, are related to entry and success in the area
of entrepreneurial activity.
IV. Socio-political system to be perceived as suitable for establishment and development of his
enterprise.
All these factors are additive in nature and their optimal presence led to the entry point of
entrepreneurship. which leads to acquisition of material resources and beginning of business.
Entrepreneurship is a behaviour rather than a personality trait. It is risky in the sense that only a few of them know
what they are doing. The whole process of developing an entrepreneur. making him start a venture, supporting and
sustaining him involves a cyclic process. M. P. Akhori suggested the entrepreneurial development cycle consisting of
the following components for the promotion and development of entrepreneurship.
1. Stimulatory activities: These activities ensure the emergence of entrepreneurs in the society. They prepare the
background for the entrepreneurship to sprout and for people to start looking for entrepreneurial pursuits. They
generate initial motivation and offer opportunity to acquire skill. These can be achieved by the following activities.
➢ Entrepreneurial education
➢ Planned publicity for entrepreneurial opportunities
➢ Identification of potential entrepreneurs through scientific methods
➢ Motivational training to new entrepreneurs
➢ Help and guidance in selecting products and preparing project repones
➢ Making available techno-economic information and product profiles
➢ Evolving locally suitable new products and processes
➢ Availability of local agencies with trained personnel for entrepreneurial counselling and promotions
➢ Creating entrepreneurial forums
➢ Recognition of entrepreneurs
2. Support activities: These activities help a person to develop into an entrepreneur. They nurture and help
entrepreneurship to grow. This can be done by providing the necessary infrastructure in the form of computers,
Internet connectivity, offering consultancy and training, and providing all required information as to how a person
should groom himself as an entrepreneur. Financial assistance for projects and seminars could also promote
entrepreneurship. These activities can be promoted in the incubation centre to groom a person to become an
entrepreneur. The various support activities are given below.
➢ Registration of unit
➢ Arranging finance
➢ Providing land. shed, power, water, and so on.
➢ Guidance for selecting and obtaining machinery
➢ Supply of scarce raw materials
➢ Getting licenses/import licenses
➢ Providing common facilities
➢ Granting tax relief or another subsidy
➢ Offering management consultancy services
➢ Help marketing the product
➢ Providing information
3. Sustaining activities: These activities are all those that help in the continuous and efficient functioning of
entrepreneurship. These include modernization of infrastructure, encouraging diversification. providing
opportunities and supporting industry-institute interaction through consultancy, promoting quality, and
organizing need-based common facilities centres. The various sustaining activities are as follows.
➢ Help modernization
➢ Help diversification/expansion/substitute production
➢ Additional financing for full capacity utilization
➢ Deferring repayment/interest
➢ Diagnostic industrial extension/consultancy services
➢ Production units' legislation/policy change
➢ Product reservation/creating new avenues for marketing
➢ Quality testing and approving services
➢ Need-based common facilities centres