ENTREPRENEURSHIP

BBA (TU)
SIXTH SEMESTER
 Chapter One
Introduction
Concept
• Entrepreneurship is the process of identifying opportunities in the
market place, arranging the resources required to pursue these
opportunities and mobilizing the resources to exploit the
opportunities for better gains.
• It is the process of creating new venture.
• It involves creativity & innovation as well as risks for reaping of
rewards.
• It is the process of identification and exploration of opportunities by
acquiring and managing resources like men, material, capital,
technology, equipments, etc..
• An individual does not have to invent something to be an
entrepreneur. He can pick up something that already exists and make
it different by his/her innovative ideas.
• Entrepreneurship can be describes as a process of
action an entrepreneur undertakes to establish his
enterprises.
• Entrepreneurship is a creative activity.
• It is an ability to create and build something from
practically nothing.
• It is an attitude of mind to seek the opportunity take
calculated risk and derive benefit by setting up the
venture.
• It comprises of numerous activities involved in
conception, creation & operating an enterprise.
• It is basically concerned with creation of wealth
through production, distribution & sales of goods and
services.
• The word ‘entrepreneur’ derives from the French words ‘entre’ meaning
‘between’ and ‘prendre’ meaning ‘to take’. The word was originally used
to describe people who ‘take on the risk’ between buyer and sellers or who
undertake a task such as starting a new venture. Later on, entrepreneur was
considered as a coordinator who combined all means of production and
managed them.

• According to Stevenson & Jarillo ‘Entrepreneurship is the process by

which individuals pursue opportunities without regards to resources they
currently control.
• According to Fred Wilson ‘Entrepreneurship is the art of turning an idea
into a business.’

• Thus entrepreneurship is the attitude to seek opportunities, take calculated

risks and derive benefits by setting up a venture. It comprises of numerous
activities involved in conception, creation and running a business venture.
It gives birth to new commodities and techniques. It involves some kind of
transformative process that create value for owners, individuals,
stakeholders as well as the society. Entrepreneurship is the driving force
for social and economic development.
 Becoming an entrepreneur
Entrepreneurship is the creation of a new business in the face of
risk and uncertainty for the purpose of achieving profit and
growth by identifying significant opportunities and assembling
and mobilizing necessary resources for the same.
The primary reasons that people become entrepreneurs & start
their own firms are,

• Desire to be their own boss.

• Desire to pursue their own ideas.
• Desire to pursue financial rewards.
• Addicted to risks
• Can’t Handle a 9-to-5 Job
• They want to change the world
1. Desire to be their own boss
• Many people want to be their own boss & they realize that
it can only be fulfilled by starting their own business.
• Such people do not like to have a superior or someone
watching over their shoulder.
• They want to work on their own without being directed or
instructed.
2. Pursue their own ideas
• People start their own ventures to pursue their own ideas.
Their ideas are unconventional & original.
• Some people are creative & they have a desire to see those
ideas realized, & this can be a reality only when you have
your own enterprise.
• Some people are naturally alert, and when they recognize
ideas for new products or services, they start their own
business to realize their ideas.
3. Desire to pursue financial rewards
• People start their own firms to pursue financial rewards.
• People want financial independence and this is the main
reason why people start their own companies.
• One of the best options for achieving financial security
is starting a business and creating their own
opportunity.
4. Addicted to risks
• Building a successful business takes a lot of risk, and
entrepreneurs love risks.
• Entrepreneurs live for excitement and adventure.
• They look to manage projects with high stakes because
they have enough confidence to execute them.
• They are addicted to risks.
5. Can’t Handle a 9-to-5 Job
The reality of working an average job doesn’t seem rewarding to
aspiring entrepreneurs.
• Having to finish unfulfilling tasks seems really boring to them.
• The repetitive and routine nature of working 9 to 5 doesn’t feed their
burning passion for creativity and innovation.
• They feel like they are simply doing what society expects of them
instead of making a difference in the world.
• It’s through starting their own business that they get to freely express
their creative ideas and fulfill their dreams.
6. They want to change the world
• The best reason to start an organization is to make meaning -- to create a
product or service to make the world a better place.”
• The exploration of meaning and doing work that changes the world is
something that drives every entrepreneur.
• Entrepreneurs learn by doing and explore with a voracious appetite.
• Entrepreneurs don’t just want to change their lives -- they want to
change the world.
 Key elements of entrepreneurship
Entrepreneurship is a multi-dimensional skill and is a complex
phenomenon. It is a dynamic activity of creating incremental wealth and
value. It can be described as a creative and innovative response to the
environment.
There are five key elements of entrepreneurship as pointed below
1. The Entrepreneur (an individual)
a. Active Search of Opportunities
b. Entrepreneurial Alertness
c. Prior Knowledge
d. Social Networks
2. Opportunity
3. Resources
4. Organization
5. Environment
a. The Community Level
b. Societal Level
1. The Entrepreneur (an individual)
• Entrepreneurship requires at least one
motivated person.
• An entrepreneur is the one who bears all the
risk of a business. In return, he gets to enjoy
all of the profits from the business as well.
• The entrepreneur brings in overall change
through innovation for the maximum social
good.
• There are number of factors that influence the
way opportunities are recognized & exploited
by entrepreneurs.
• Four important factors are identified are explained below
i. Active Search for opportunities
• Entrepreneurs are more likely than managers & common
people to engage in active search for opportunities and
potential untapped sources of profit.
• Searches by entrepreneurs must be carefully directed in
order to succeed.
ii. Entrepreneurial Alertness
• Alertness is the tendency to notice or be sensitive to
information in the environment.
• Alert individual easily sense problems, unmet needs &
novel combination of resources.
• Alertness depends on creativity and high intelligence of
individual.
• Alertness help entrepreneurs to identify creative
solutions for fulfilling market or customer needs.
iii. Prior Knowledge
• Prior knowledge to individual in a particular field
allows him/her to recognize opportunities in the
concerned field, which others would not.
• Prior knowledge & experience in a particular field
pushes an individual towards entrepreneurship.
iv. Social Networks
• Individuals with open & wide network is more like to
be introduced to new ideas & opportunities, than
individual with closed network.
• Wider social network is likely to have access to wider
range of information and resources.
• It is better to have connections to a variety of
networks rather than may connections within a single
network.
2. Opportunity
• An opportunity is a situation in which a new product , service or
process can be introduced and sold at greater that its cost of
production.
• Under-utilized or unemployed resources, as well as new
technologies may also offer possibilities to create new value for
customers.
• Entrepreneurs identify unused resources and then seek a better
use of these resources.
3. Resources
• A resource is anything of quality that is useful.
• Various resources are essential for a venture.
• Majority of new venture lack initial resources.
• Availability and unavailability of resources impact ventures.
• Entrepreneurs use time-relevant language, polished business
plans, sylish offices to create an image of success that will
encourage resource providers to commit resources to the venture.
4. Organization
• Many different types of organizational
arrangement exist for the exploitation of
entrepreneurial opportunities.
• Possible types of organization structure include
corporate ventures, franchise, joint ventures &
business acquisition.
• It may be a new entity either as an internal
division or a new subsidiary in a established
corporation.
• Entrepreneurship can take place in diverse
environment and there are many ways to
become an entrepreneur.
5. Environment
• Entrepreneurs operate in an environment than can be more or less
rich in opportunities.
• There are various conditions that influence the pursuit of these
opportunities.
• There are two levels of environment that influence the emergence
of business venture,
a. The community level
• Individuals trying to create business ventures in a population
with high density (number of organization in an industry)will find
more opportunities for acquiring effective knowledge and
creating extensive social networks, but they will also encounter
more intensive competition.
b. Societal Level
• Two aspects at societal level, cultural norms & values, shape the
environment for entrepreneurial intention.
• Government actions and political events create new institutional
structure for entrepreneurial action, encouraging some activities
 Characteristics of successful entrepreneurs
1. Passion for the business 2. Product/Customer Focus 3. Tenacity Despite Failure

5. Others
Hard work
4. Execution Intelligence
Desire for high achievement
Highly optimistic
Independence
Foresight
Good organizer
innovative
1. Passion for the Business
• Passion is a strong & powerful emotions. Successful
entrepreneurs are passionate.
• They feel deeply about their product or service or
mission.
• Passion is what will help you find motivation when you
are discouraged and it will drive your forward.
• Passion is fuel for successful entrepreneurship.
• If you find yourself losing your passion, that might be
the clue that it’s time to move on to something else
(that stokes your passion).
• The passion of entrepreneur towards the business
must be consistent with his/her skill and must be a
legitimate business opportunity.
2. Product / Customer Focus
• Entrepreneurs understand who they are selling to
and what they offer.
• They focus on customer and the product.
• In order to be a succeed, you need to think about
who you're trying to impress and you need to know
what you offer.
• Entrepreneur understand what do customers like?
and what they don't they like?
• Entrepreneur perform market research and get a
clear idea about the detail profile of the customers
& the product or service that suits.
• Unless you have good products and capability to
satisfy customers other entrepreneurial efforts
3. Tenacity Despite Failure
• Tenacity means persistent determination. Entrepreneurs
are determined to materialize their ideas
• Entrepreneurs are always trying something new, thus the
failure rate with their efforts is naturally high but they do
not lose hope.
• They do not get embarrassed by their failures rather they
learn from failure and start again.
• If the idea doesn’t work first time, they don't give up but
they continue and keep moving forward.
• They have consistency in their effort.
• All successful entrepreneurs keep going on no matter
what.
• Developing a new business idea may require a certain
degree of experimentation before success is attained.
4.Execution Intelligence
• The success & failure of a venture depends on
the intelligence of the entrepreneurs.
• Entrepreneurs effectively & intelligently
execute a business idea into a venture.
• Execution intelligence includes developing a
business model & the venture team, raising
money, managing finances, leading &
motivating employees, etc.
• It also includes the ability to translate thought,
creativity, & imagination into action and
measurable results.
5. Others
• Entrepreneurs are hard working. They love to work. They not only work hard but
also work smart.
• They have a desire for high achievement. They are not satisfied with what they
have in hand.
• They are highly optimistic. They always have hope in what they are doing & that
it will ultimately bear fruits.
• Entrepreneurs want independence. They don’t like to be instructed. They want
to work independently on their own.
• They are forward looking & are able to anticipate trends, opportunities, & future
organizational challenges. They can foresee the future.
• Entrepreneurs are good organizer. They are capable to manage & mobilize
resources effectively & efficiently.
• They are creative & innovative. They are always doing something new. They do
things differently.
• Entrepreneurs are self motivated.
• They are not afraid to say no.
• Entrepreneurs are risk takers. They take calculated risks.
• They create S.M.A.R.T. (Specific, Measurable, Attainable, Realistic and Timely)
Common myths about entrepreneurs
(myth: a widely held but false belief or idea.)
Myth 1. Entrepreneurs are born not made
Myth 2. Entrepreneurs are gamblers
Myth 3. Entrepreneurs are motivated primarily by money
Myth 4. Entrepreneurs are doers, not thinkers
Myth 5. Entrepreneurs are always inventors
Myth 6. Entrepreneurs must fit the ‘profile’
Myth 7. All entrepreneurs need is luck
Myth 8. Entrepreneurs seek success but experience high
failure rates
Myth 9. Entrepreneurs should be young and energetic
Myth 10. Entrepreneurs love the spotlight
 Types of start-up firms
1. Salary substitute firms
• Firms that basically provide their owner/s a
similar level of income to what they would be
able to earn in a conventional job or when
working for an employer.
• Dry cleaners, hair saloons, retail stores, & most
small firms fit into this category.
• Such firms offer common & easily available
products & services to customers which are not
innovative too.
2. Lifestyle firms
• Firms that provide their owner/s the opportunity to
pursue a particular lifestyle, and make a living at it.
• Life style firms promote a particular sport or hobby
or a pastime & may employ only the owner or just a
few people.
• Tour operators or tour guides, tattoo parlors, wine
bars, etc. are some examples.
• A hobby or an interest of an individual may turn into
a lifestyle firm.
• Such firms are not innovative and do not grow
quickly.
3. Entrepreneurial firms
• Firms that bring new products and services to
the market by creating & seizing opportunities
regardless of the resources they currently
control.
• Entrepreneurial firms create value to the
customers with new products & services.
• Value refers to worth, importance or utility of
the product.
• Such firms are creative and innovative and have
the potential to grow, expand and lead the
market.
Importance of entrepreneurship/entrepreneurial firms

1. Innovation
• Entrepreneurship is the incubator of the innovation.
• It goes beyond discovery and does implementation
and commercialization, of innovations.
• Research & development are being contributed by
entrepreneurship.
• Thus, entrepreneurship nurses innovation that
provides new ventures, product, technology, market,
quality of good etc. to the economy that increases
Gross Domestic Products and standard of living of
the people.
2. Job Creation
• Entrepreneurship helps in establishment and
operation of new business venture, which
requires manpower having various skill.
• Entrepreneurship firms contributed a large
share of new jobs. Thus it helps in job
creation and solve unemployment problem.
• They create capital and resources as well
which are the basis of job creation.
3. Enhances standard of living
• Standard of living is a concept built on increasing
amount of consumption of a variety of goods and
services over a particular period by a household.
• Entrepreneurship provides enormous kinds of a product
of various natures by their innovation.
• Besides, it increases the income of the people who are
employed in the entrepreneurial enterprises. Such
employed persons consume more goods and services.
• Entrepreneurial firms develop new products and
services, which make our lives easier, enhance our
productivity at work, improve our health and entertain
us.
• Thus entrepreneurship enhances the standard of living
of the people of a country.
4. Facilitate larger firms
• Many entrepreneurial firms build their entire
business models around producing products
and services that are used or consumer by
other larger firms.
• Larger firms do not manufacture the entire
product rather they use products
manufactured by other entrepreneurial
firms.
• Thus it facilitates other larger firms to be
more effective and efficient.
5. Entrepreneurs Add to National Income
• Entrepreneurial ventures literally generate new
wealth.
• New and improved offerings, products or
technologies from entrepreneurs enable new
markets to be developed & new wealth created.
• Additionally, the effect of increased
employment and higher earnings contribute to
better national income in form of higher tax
revenue and higher government spending.
• This revenue can be used by the government to
invest in other, struggling sectors & human
capital.
6. Impact on community development
• A community is better off if its employment base is
diversified among many small entrepreneurial firms.
• It promotes abundant retail facilities, a higher level
of home ownership, fewer slums, better, sanitation
standards and higher expenditure on education,
recreation, and religious activities.
• They also invest in community projects and provide
financial support to local charities.
• Thus, entrepreneurship leads to more stability and a
higher quality of community life.
7. Increase promotion and decrease import
8. Industrialization
 The Process of New Venture Creation
Recognition of Evaluation of Exploitation of
Opportunities opportunities opportunities

Environment
•Community
•Political
•Economic
•Socio-cultural Intention
Concentrate steps to Decision Fund
evaluate and shape (Triggers › barriers)
the opportunity or
Opportunity
•Market research Abandon
•Gather resources (Triggers ‹ barriers)
Individuals •Business plan
•Alertness
•Knowledge
•Social Network
•Aspirations
The Process of New Venture Creation / Promotion of an Enterprise

• 1. Recognition of opportunities
• The task of promotion of venture begins with search
for appropriate business ideas and opportunities.
• The business idea may be generated by himself or
other sources like success stories of other
entrepreneurs, product demand, project reports,
incentives and aid by government, trade fairs, as
well as perception of market needs and
underemployed or idle resources.
• A favorable political, economic, social and
infrastructure environment facilitates idea
generation.
• 2. Evaluating the Opportunities
• In this stage the entrepreneur has to take care of
the environmental factors like economic, social,
political, geographical and government factors,
which are mostly beyond the control of the
entrepreneur.
• The entrepreneur has to analyze and examine
these environmental factors.
• He takes concrete steps towards evaluating the
business opportunities and such step include
formulation of strategy, development of a
prototype, market research, identification of
potential partners and drafting a business plan.
• 3. Exploitation of Opportunities
• The entrepreneur prepares an opportunity
analysis.
• Which includes a description of the product or
service, assessment of opportunity, assessment
of entrepreneur and the team, specification of
the all the activities and resources needed and
the source of capital to finance the initial venture.
• He must finally decide whether to proceed or
abandon the attempt to establish the venture.
• S/he proceeds if he perceives the advantages are
greater than the barriers and vice versa.
 Entrepreneurship Development in Nepal
• Entrepreneurship is a job that requires detailed observation
and continued support during the various stages of
entrepreneurial journey. There are various factors that
exercise a strong influence on the personality or background
of the entrepreneur and effect the entrepreneurial
development in Nepal, which are described below:
• 1. Caste Emergence
Historical facts of entrepreneurial development in Nepal,
shows that caste system is responsible for emergence of
entrepreneurial class in Nepal. Entrepreneurial traits are
found in certain regions and castes such as Newar, Thakali,
Choudhary, Gupta, Agrawal, etc. and are dominating the
entrepreneurial world in Nepal.
• 2. Family Background
• Family background has also played an important role in
the entrepreneurial development in Nepal. Family
entrepreneurial groups like Newar, Choudhary , Gupta,
etc. have emerged as entrepreneurial class in Nepal.
• 3. Religious Background
• It is an admitted fact that religion is also responsible for
the emergence of entrepreneurial class in Nepal. Studies
reveal that religion does not restrain/hinder
entrepreneurial spirit in Nepal.
• 4. Occupational Background
• Occupational background has an important role in
entrepreneurial development in Nepal. Professionals are
more attracted towards entrepreneurship than
agriculturists.
• 5. Education and Technical know-how
• There is a close relationship between education,
entrepreneurship and development. Majority of
entrepreneurs are graduate, post-graduate and have
technical know-how, in Nepal.
• 6. Form of Ownership Preferred
• In Nepal more than one-third of the units are
partnership firms, nearly one-third are sole trading
concern and about one-tenth are private limited
companies.
• 7. Individual Factors
• Individual factors also play an important role in
development of entrepreneurship in Nepal. An
entrepreneur takes interest in the establishment of a
new venture on his own taste & preferences.