Institute of Management Studies Management

Code Title
MGTDCMGM016T ENTREPRENEURSHIP
L T/M P N Total Credit
Credit Hours
3 - - - 3
Prerequisites -
(if any)
1. To train the students about Entrepreneurship and itstraits.
2. To help students in generating ideas for starting the venture.
Course 3. To enhance the knowledge of students about Business plan.
Objectives
4. To motivate students to enhance leading skills and managing the new venture.
5. To educate the students about acquisition and merger.
UNIT I:
Introduction to Entrepreneurship: Definition of Entrepreneur, Entrepreneurial
Traits, Entrepreneur vs. Manager, Entrepreneur vs. Intrapreneur, The
Entrepreneurial decision process, Role of Entrepreneurship in Economic
Development, Ethics and Social responsibility of Entrepreneurs, Opportunities for
Entrepreneurs in India and abroad, Woman as Entrepreneur.
UNIT II:
Creating and Starting the Venture: Sources of new Ideas, Methods of generating
ideas, creativity, problem solving, product planning and development process.
UNIT III:
Course
The Business Plan: Nature and scope of Business plan, Writing Business Plan,
Content
Evaluating Business plans, Using and implementing business plans, Marketing plan,
financial plan and the organizational plan, Launching formalities.
UNIT IV:
Financing and managing the New Venture: Sources of capital, Record keeping,
recruitment, motivating and leading teams, financial controls, Marketing and sales
controls, E-commerce and Entrepreneurship, Internet advertising.
UNIT V:
New Venture Expansion Strategies and Issues: Features and evaluation of joint
ventures, acquisitions, merges, franchising. Public issues, rights issues, bonus issues
and stock splits.
1. Charanthimath, Entrepreneurship Development Small Business Enterprises,
Pearson Education.
2. Kuratko&Hodgetts, Entrepreneurship in the New Millennium, ReprintCengage
Learning.
Texts
3. Vasant Desai, Small scale Industries and Entrepreneurship, Himalaya Publishing
House.
4. David H Holt, Entrepreneurship: New Venture Creation, PHI.
5. Rajeev Roy, Entrepreneurship, Oxford University Press.

1. Greene, Entrepreneurship, Cengage Learning.

2. B. K., Mohanty Fundamentals of Entrepreneurship, PHI.
References
3. Barringer, Entrepreneurship, Pearson Education.
4. KanishkaBedi, Management and Entrepreneurship, Oxford University Press.
 5. Desai Vasant, Dynamics of Entrepreneurship Development and
Management,Himalaya Publishing House.
6. Coulter, Entrepreneurship in Action, PHI Learning.

1. Enhancing skills of students about basics of Entrepreneurship, opportunity and

decision-making process.
2. Understanding of developing new ideas its implementation in starting new
venture and its development.
Course 3. Preparing students about writing Business Plan its implementation and launching
Outcomes Formalities.
4. Students will learn to basics of E-commerce, Entrepreneurship and various
sources of Capital.
5. Students will acquire knowledge about basic features of joint ventures,
acquisitions, mergers and also its strategies for maintenance and expansion.
 Entrepreneurship

Unit I

Introduction to Entrepreneur: Concept, Characteristics, functions of an entrepreneur,

Entrepreneur Vs Manager, Types of entrepreneur, Entrepreneurial Mind Set, Key attributes of an
entrepreneur, desirable and acquirable traits and behaviors, Readiness of the entrepreneur: Right
age, right time and right conditions, Myths and Realities of entrepreneurship. Entrepreneurship
and Intrapreneurship: Similarities and variance, Developing Corporate Entrepreneurship. Women
entrepreneurs:-Meaning, role, problems for women entrepreneurs, Rural entrepreneurship, social
entrepreneurship, Entrepreneurship Development, Entrepreneurial support systems and role of
government in Entrepreneurship Development..

Unit II

Entrepreneurial Motivation: Concept and Theories, Entrepreneurial Strategy: Generating and

Exploiting New Entry Opportunities, Generation of new Entry Opportunity, entry Strategy, Risk
reduction strategies for New Entry Exploitation Creativity and Business Idea Generation: Concept
of creativity, ideas from trend analysis, sources of new ideas, Methods of generating new ideas,
Creative problem solving, creativity and entrepreneurship. Entrepreneurial Innovation: Concept
and types, Opportunity Recognition and opportunity assessment plan, product planning and
development process..

Unit III

Protecting Ideas and Legal issues for the entrepreneur. Concept of IPR, Patents, Trademarks,
Copyrights, Licensing, Product Safety, Other Legal Issues in Setting Up An Organisation.
Business Plan Creating and Starting the Venture: Concept of Business
Plan, Scope and Value, Writing the business plan, Using and implementing business plan.
Succession Planning and Strategies for Harvesting and Ending Venture: Exit Strategy ,
succession of Business, Selling off, bankruptcy Reasons of failure of
business plan, Reasons for the failure of entrepreneurial ventures.
 CONTENTS

S.NO. TOPIC
UNIT-I
1 INTRODUCTION TO ENTREPRENEURSHIP
1.1 Meaning of Entrepreneur, Enterprise, Entrepreneurship
1.2 Characteristics, functions, importance, Entrepreneur Vs Manager
Types of Entrepreneurs, Entrepreneurial mindset ,Key attributes of an
1.3 entrepreneur,
Readiness of the entrepreneur: Right age, right time and right conditions, Myths
1.4 and Realities of entrepreneurship
1.5 Entrepreneurship and Intrapreneurship: Similarities and variance
1.6 Developing Corporate Entrepreneurship.

2 WOMEN ENTREPRENEURS IN INDIA

2.1 Meaning, characteristics of Women Entrepreneurs.
2.2 Challenges and problems faced by Women Entrepreneurs
2.3 Remedial measures to promote women Entrepreneurs
2.4 Rural entrepreneurship, social entrepreneurship

ENTREPRENEURIAL DEVELOPMENT
3.
3.1 Entrepreneurial support systems
3.2 Role of government in Entrepreneurship Development.

UNIT-II
4 ENTREPRENEURIAL MOTIVATION
4.1 Concept and Theories
 5 ENTREPRENEURIAL STRATEGY
5.1 Generating and Exploiting New Entry Opportunities

6 CREATIVITY AND BUSINESS IDEA GENERATION

Concept of creativity, ideas from trend analysis, sources of new ideas, Methods
6.1 of generating new ideas
6.2 Creative problem solving, creativity and entrepreneurship

7. ENTREPRENEURIAL INNOVATION
7.1 Concept and types
7.2 Opportunity Recognition and opportunity assessment plan
7.3 Product planning and development process

UNIT-III
PROTECTING IDEAS AND LEGAL ISSUES FOR THE
8. ENTREPRENEUR
Concept of IPR, Patents, Trademarks, Copyrights, Licensing, Product Safety,
8.1 Other Legal Issues in Setting Up An Organisation.

9. BUSINESS PLAN CREATING AND STARTING THE VENTURE

9.1 Concept of Business Plan, Scope and Value
9.2 Writing the business plan, Using and implementing business plan.

SUCCESSION PLANNING AND STRATEGIES FOR HARVESTING

10. AND ENDING VENTURE
10.1 Exit Strategy , Succession of Business, Selling off, bankruptcy
10.2 Reasons of failure of business plan
10.3 Reasons for the failure of entrepreneurial ventures
 ENTREPRENEURSHIP

UNIT-I

 CONCEPT:

 THE ENTERPRISE is some business structure/object that usually carries out some
commercial activity, creates new job positions, gains some profits.

 ENTREPRENEURSHIP is the art of starting a business, basically a startup company

offering creative product, process or service. We can say that it is an activity full of creativity.
An entrepreneur perceives everything as a chance and displays bias in taking decision to
exploit the chance. An enterprise is created by an entrepreneur. The process of creation is
called “entrepreneurship

 AN ENTREPRENEUR 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. is a creator or a designer who designs new ideas and business processes
according to the market requirements and his/her own p assion. To be a successful
entrepreneur, it is very important to have managerial skill and strong team building abilities.
Leadership attributes are a sign of successful entrepreneurs.

ENTREPRENEURSHIP ENTREPRENURE
ENTERPRISE
(OBJECT) (PROCESS OF (PERSON)
ACTION)
An entrepreneur is a person who is action-oriented and highly motivated to take a risk and to
achieve such a goal dot brings about a change in the process of generating goods or services or re-
initiates progress in the advent of creating new organizations.

 CHARACTERISTICS FOR THE ENTREPRENEUR :

1. Entrepreneur is an agent

An entrepreneur is perceived as an economic agent who assembles materials for producing goods
at a cost that ensures profits and re-accumulation of capital.

He is also understood as a change agent who brings about changes in the structure and formation
of the organization, market and the arena of goods and services.

2. Entrepreneur is a risk-taker

A risk-taking ability is essential for an entrepreneur. Without the will to explore the unknown, one
cannot discover something unique. And this uniqueness might make all the difference.
Entrepreneurs have a differentiated approach towards risks. Good entrepreneurs are always ready
to invest their time and money. But, they always have a backup for every risk they take.

3. Entrepreneur is a profit maker

An entrepreneur is an individual who establishes and manages the business for the principle
purpose of profit and growth.

4. Entrepreneur is an achievement motivator

David C. McClelland has initiated this concept of the entrepreneur by calling him “as per sun with
a strong desire for achievement.” Later on, Meredith and others have expressed the same concept
while they termed “entrepreneurs are action-oriented, highly’ motivated individuals.”Therefore,
entrepreneurs have to have a deep-rooted need for achieving their goals.
5. Passion:

Your work should be your passion. So when you work, you enjoy what you’re doing and stay
highly motivated. Passion acts as a driving force, with which, you are motivated to strive for better.

It also allows you the ability to put in those extra hours in the office which can or may make a
difference. At the beginning of every entrepreneurial venture or any venture, there are hurdles but
your passion ensures that you are able to overcome these roadblocks and forge ahead towards your
goal.

6. Creativity:

Creativity gives birth to something new. For without creativity, there is no innovation possible.
Entrepreneurs usually have the knack to pin down a lot of ideas and act on them. Not necessarily
every idea might be a hit. But the experience obtained is gold. Creativity
helps in coming up with new solutions for the problems at hand and allows one to think of solutions
that are out of the box. It also gives an entrepreneur the ability to devise new products for similar
markets to the ones he’s currently playing in.

7. Professionalism:

Professionalism is a quality which all good entrepreneurs must possess. An entrepreneurs

mannerisms and behavior with their employees and clientele goes a long way in developing the
culture of the organization.

Along with professionalism comes reliability and discipline. Self-discipline enables an

entrepreneur to achieve their targets, be organized and set an example for everyone.

Reliability results in trust and for most ventures, trust in the entrepreneur is what keeps the people
in the organization motivated and willing to put in their best. Professionalism is one of the most
important characteristics of an entrepreneur.
8. Knowledge:

Knowledge is the key to success. An entrepreneur should possess complete knowledge of his niche
or industry. For only with knowledge can a difficulty be solved or a crisis is tackled.

It enables him to keep track of the developments and the constantly changing requirements of the
market that he is in. May it is a new trend in the market or advancement in technology or even a
new advertiser’s entry, an entrepreneur should keep himself abreast of it. Knowledge is the guiding
force when it comes leaving the competition behind. New bits and pieces of information may just
prove as useful as a newly devised strategy.

He should know what his strengths & weaknesses are so that they can be worked on and can result
in a healthier organization.

A good entrepreneur will always try to increase his knowledge, which is why he is always a learner.
The better an entrepreneur knows his playground, the easier he can play in it.

9. Open-mindedness towards learning, people, and even failure:

An entrepreneur must be accepting. The true realization of which scenario or event can be a useful
opportunity is necessary. To recognize such openings, an open-minded attitude is required.

An entrepreneur should be determined. He should face his losses with a positive attitude and his
wins, humbly. Any good businessman will know not to frown on a defeat. Try till you succeed is
the right mentality. Failure is a step or a way which didn’t work according to the plan. A good
entrepreneur takes the experience of this setback and works even hard with the next goal in line.

10. Entrepreneur is a reward receiver

An entrepreneur is a person who creates something new of value by devoting time and efforts and
in turn receives monetary and personal rewards. Max Weber, Hartman, Hisrich and Peters have
recognized this distinct phenomenon of entrepreneurs.
11. Customer is everything:

A good entrepreneur will always know this; a business is all about the customer. How you grab a
customer’s attention is the first step. This can be done through various

mediums such as marketing and advertising. It is also important that you know the needs of your
customers. The product or service which is being created by your organization needs to cater to
the needs of your consumers. Personalising a business for consumers will also boost the sales.

 FUNCTIONS OF ENTREPRENEURSHIP:

1. Economic and dynamic activity:

Economic activity because it involves the creation and operation of an enterprise with a view to
creating value or wealth by ensuring optimum utilisation of scarce resources. Since this value
creation activity is performed continuously in the midst of uncertain business environment,
therefore, entrepreneurship is regarded as a dynamic force.
2. Related to innovation:
Entrepreneurship involves a continuous search for new ideas. Entrepreneurship compels an
individual to continuously evaluate the existing modes of business operations so that more efficient
and effective systems can be evolved and adopted. In other words, entrepreneurship is a continuous
effort for synergy (optimization of performance) in organizations.

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

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.
 5. Goal oriented activity:
Entrepreneur has to develop the business objectives in clear terms. So that he can carry on the
business in accordance with the objectives.

6. Value creation:
Entrepreneurship is a process of creating value for customers by exploiting untapped opportunities.
Through entrepreneurship, new products, services, technologies, resources, markets are created
that contribute value to community.
7. Creative and purposeful activity:
Entrepreneurship is a creative response to the changing environment. Introduction of something
new and creative is the main purpose of entrepreneurship.
8. Flexibility:
It means ability to move quickly in response to changing market.

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

This exercise helps in sharpening the decision making skills of an entrepreneur. Besides, these
managerial capabilities are used by entrepreneurs in creating new technologies and products in
place of older technologies and products resulting in higher performance.
2. Creation of organisations:
Entrepreneurship results into creation of organisations when entrepreneurs assemble and
coordinate physical, human and financial resources and direct them towards achievement of
objectives through managerial skills.

3. Improving standards of living:

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

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

4. Means of economic development:

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

 ENTREPRENEUR VS MANAGER
 KEY DIFFERENCES BETWEEN ENTREPRENEUR AND MANAGER

The difference between entrepreneur and manager can be drawn clearly on the following
grounds:

1. A person, who creates an enterprise, by taking a financial risk in order to get profit, is called
an entrepreneur. An individual who takes the responsibility of controlling and administering
the organisation is known as a manager.

2. An entrepreneur focuses on business startup whereas the main focus of a manager is to manage
ongoing operations.

3. Achievements work as a motivation for entrepreneurs. On the other hand, the primary
motivation is the power.

4. The manager’s approach to the task is formal which is just opposite of an entrepreneur.

5. An entrepreneur is the owner of the enterprise while a manager is just an employee of the
company.

6. A manager gets salary as remuneration for the work performed by him. Conversely, profit is
the reward for the entrepreneur.

7. An entrepreneur’s decisions are driven by inductive logic, courage, and determination; that is
why the decision making is intuitive. On the contrary, the decision making of a manager is
calculative, as they are driven by deductive logic, the collection of information and advice.

8. The major driving force of an entrepreneur is creativity and innovation. As against this, a
manager maintains the existing state of affairs.

9. While entrepreneur is a risk taker, the manager is risk averse.

 ENTREPRENEURS ARE CLASSIFIED INTO DIFFERENT TYPES BASED ON
DIFFERENT CLASSIFICATIONS AS MENTIONED BELOW: (TYPES)

 BASED ON THE TYPE OF BUSINESS:

1. Trading Entrepreneur:
As the name itself suggests, the trading entrepreneur undertake the trading activities. They procure
the finished products from the manufacturers and sell these to the customers directly or through a
retailer. These serve as the middlemen as wholesalers, dealers, and retailers between the
manufacturers and customers.

2. Manufacturing Entrepreneur:
The manufacturing entrepreneurs manufacture products. They identify the needs of the customers
and, then, explore the resources and technology to be used to manufacture the products to satisfy
the customers’ needs. In other words, the manufacturing entrepreneurs convert raw materials into
finished products.

3. Agricultural Entrepreneur:
The entrepreneurs who undertake agricultural pursuits are called agricultural entrepreneurs. They
cover a wide spectrum of agricultural activities like cultivation, marketing of agricultural produce,
irrigation, mechanization, and technology.

 BASED ON THE USE OF TECHNOLOGY:

1. Technical Entrepreneur:
The entrepreneurs who establish and run science and technology-based industries are called
‘technical entrepreneurs.’ Speaking alternatively, these are the entrepreneurs who make use of
science and technology in their enterprises. Expectedly, they use new and innovative methods of
production in their enterprises.

2. Non-Technical Entrepreneur:
Based on the use of technology, the entrepreneurs who are not technical entrepreneurs are non-
technical entrepreneurs. The forte of their enterprises is not science and technology. They are
concerned with the use of alternative and imitative methods of marketing and distribution
strategies to make their business survive and thrive in the competitive market.

 BASED ON OWNERSHIP:
1. Private Entrepreneur:
A private entrepreneur is one who as an individual sets up a business enterprise. He / she it’s the
sole owner of the enterprise and bears the entire risk involved in it.

2. State Entrepreneur:
When the trading or industrial venture is undertaken by the State or the Government, it is called
‘state entrepreneur.’

3. Joint Entrepreneurs:
When a private entrepreneur and the Government jointly run a business enterprise, it is called
‘joint entrepreneurs.’

 BASED ON GENDER:
1. Men Entrepreneurs:
When business enterprises are owned, managed, and controlled by men, these are called ‘men
entrepreneurs.’

2. Women Entrepreneurs:
Women entrepreneurs are defined as the enterprises owned and controlled by a woman or women
having a minimum financial interest of 51 per cent of the capital and giving at least 51 per cent of
employment generated in the enterprises to women.

 BASED ON THE SIZE OF ENTERPRISE:

1. Small-Scale Entrepreneur:
An entrepreneur who has made investment in plant and machinery up to Rs 1.00 crore is called
‘small-scale entrepreneur.’
2. Medium-Scale Entrepreneur:
The entrepreneur who has made investment in plant and machinery above Rs.1crore but below 5
crore is called medium scale enterprise.

3. Large scale enterprise:

The entrepreneur who has made investment in plant and machinery more than 5 crore is known
as large scale enterprise.
 ACCORDING TO CLARENCE DANHOF ENTREPRENEURS CAN BE OF 4
TYPES:
1. Innovating Entrepreneurs:
Innovating entrepreneurs are one who introduce new goods, inaugurate new method of production,
discover new market and reorganise the enterprise. It is important to note that such entrepreneurs
can work only when a certain level of development is already achieved, and people look forward
to change and improvement.

2. Imitative Entrepreneurs:
These are characterized by readiness to adopt successful innovations inaugurated by innovating
entrepreneurs. Imitative entrepreneurs do not innovate the changes themselves, they only imitate
techniques and technology innovated by others. Such types of entrepreneurs are particularly
suitable for the underdeveloped regions for bringing a mushroom drive of imitation of new
combinations of factors of production already available in developed regions.

3. Fabian Entrepreneurs:
Fabian entrepreneurs are characterized by very great caution and skepticism in experimenting any
change in their enterprises. They imitate only when it becomes perfectly clear that failure to do so
would result in a loss of the relative position in the enterprise.

4. Drone Entrepreneurs:
These are characterized by a refusal to adopt opportunities to make changes in production formulae
even at the cost of severely reduced returns relative to other like producers. Such
entrepreneurs may even suffer from losses but they are not ready to make changes in their
existing production methods.

 Following are some more types of entrepreneurs listed by some other behavioural
scientists:
1. Solo Operators:
These are the entrepreneurs who essentially work alone and, if needed at all, employ a few
employees. In the beginning, most of the entrepreneurs start their enterprises like them.

2. Active Partners:
Active partners are those entrepreneurs who start/ carry on an enterprise as a joint venture. It is
important that all of them actively participate in the operations of the business. Entrepreneurs who
only contribute funds to the enterprise but do not actively participate in business activity are called
simply ‘partners’.

3. Inventors:
Such entrepreneurs with their competence and inventiveness invent new products. Their basic
interest lies in research and innovative activities.

4. Challengers:
These are the entrepreneurs who plunge into industry because of the challenges it presents. When
one challenge seems to be met, they begin to look for new challenges.

5. Buyers:
These are those entrepreneurs who do not like to bear much risk. Hence, in order to reduce risk
involved in setting up a new enterprise, they like to buy the ongoing one.

6. Life-Timers:
These entrepreneurs take business as an integral part to their life. Usually, the family enterprise
and businesses which mainly depend on exercise of personal skill fall in this type/category of
entrepreneurs.
 WHAT IS AN ENTREPRENEURIAL MINDSET?
Entrepreneurial mindset: a way of thinking that enables you to overcome challenges, be
decisive, and accept responsibility for your outcomes. It is a constant need to improve your skills,
learn from your mistakes, and take continuous action on your ideas. Anyone willing to do the work
can develop an entrepreneurial mindset.

 ENTREPRENEURIAL MINDSET: 5 CHARACTERISTICS OF

ENTREPRENEURSHIP

1. Decisiveness

To succeed as an entrepreneur, you must gain the ability to look at a problem or situation, digest
all available data (at that point in time), and make a confident decision to move forward. Your
ability as a decision-maker will make or break your future successes. In fact, at the opposite end,
indecision is one of the greatest causes of business failure.

When you can’t decide what to do, you delay taking action. In other words, you do nothing. Think
about how many dreams (and businesses) failing to take action has killed.

Like many other skills an entrepreneur needs, being decisive is a skill that can (and should) be
practiced and strengthened in your day to day life — starting with the tiniest decisions.

The entrepreneurial mindset in action: Sandwich or salad?

For example, the next time you are out for lunch at a restaurant, scan the menu once and decide
what to order. And do it confidently. This can seem trivial or unnecessary, but it absolutely isn’t.
Being decisive takes practice to master and it begins with small decisions in the businessof daily
life. From here you can build on your decisiveness and begin to use it in bigger and bigger ways.
2. Confidence

There are many skills you will need to learn to accomplish everything you want in life. But how
do you act confidently when you don’t know what you are doing? You learn to act with
confidence, the second characteristic of the entrepreneurial mindset. And one the of the most
important qualities of an entrepreneur. It is essential that you get used to the uncomfortable feeling
of knowing that you don't know what you’re doing. Whether it's getting on stage to speak,
launching your product, or learning how to start a blog and publishing your ideas to the world, we
tend to see others doing it and incorrectly assume they've always been good at it. Theyweren't born
knowing how to speak confidently, launch successful products, or write excellent books. They also
weren't born knowing how to become entrepreneurs. They learned and we can, too. The difference
between appearing good or bad at something is often a matter of acting confidently.

3. Accountability

The entrepreneurial mindset comes from taking responsibility for your actions and outcomes.

You need to internalize and accept that:

 Everything that happens at work – YOU are responsible for.

 Everything that happens to your business – YOU are responsible for.
 Whether you succeed or fail, it is YOUR responsibility.

From this moment forward, you must accept responsibility for everything in your life and hold
yourself accountable to it. Sorry to tell you, but nobody cares how little time, money, or external
support you have to accomplish your goals. Your circumstances may not be your fault, but they
are your responsibility. All that matters is what you are doing RIGHT NOW to find your success.
There are no more excuses. Accountability is required of entrepreneurs as well as successful
employees. Stop passing the buck and blaming others. Hold yourself accountable – even when you
aren’t to blame – and take action to fix the problem. The entrepreneurial mindset requires you to
take complete control and hold yourself accountable to your outcomes – both
good and bad. As James Altucher said on the podcast, life is a sentence of failures punctuated with
brief successes.

4. Resilience

As an entrepreneur, you will need to learn to deal with making mistakes and failing. They are
inevitable and a part of your growth. If every misstep plummets you into self-doubt, you have to
change the way you look at being wrong. This mindset shift takes resilience and is foundational
to the entrepreneurial mindset. Success rarely happens in a straight line. Taking wrong turns and
making mistakes is something that happens to everyone.

“The only people who don’t make mistakes are the ones who don’t do anything.” Resilience
isn’t only helpful when dealing with catastrophic mistakes. It’s a way to handle the small, simple
decisions you’ve made that didn’t turn out right.

Resilience enables you to think, act, and move iteratively — making small, incremental corrections
along the way.

The entrepreneurial mindset in action: The wind-blown pilot

For example, imagine you are the pilot of a plane taking off from Miami and heading north to
Boston. With the Atlantic Ocean on the right, there’s bound to be a strong wind pushing it
westward (or to the left). As the pilot, you set a trajectory north to Boston upon departure. Yet
with the wind blowing, you are beginning to get slightly off course.

Do you keep plowing ahead as planned and end up in Chicago instead? Or do you continually
and incrementally correct your course against the wind and turbulence? The answer is obvious.
You need to constantly correct against external forces, or you will never reach your destination.
You need to be resilient to change and keep pushing ahead no matter what may try and knock you
off course. There is no straight line to where you are going.
5. Humility

Humility is freedom from pride or arrogance, and it ties all of the characteristics of
entrepreneurship. From decisiveness to confidence, humility will keep you focused and centered.
From accountability to resilience, you will continue to move forward through failure, mistakes,
and upsets. This is accomplished with humility.

 KEY ATTRIBUTES OF THE ENTREPRENEUR :

1. Entrepreneur is an agent

An entrepreneur is perceived as an economic agent who assembles materials for producing goods
at a cost that ensures profits and re-accumulation of capital.

He is also understood as a change agent who brings about changes in the structure and formation
of the organization, market and the arena of goods and services.

2. Entrepreneur is a risk-taker

A risk-taking ability is essential for an entrepreneur. Without the will to explore the unknown, one
cannot discover something unique. And this uniqueness might make all the difference.
Entrepreneurs have a differentiated approach towards risks. Good entrepreneurs are always ready
to invest their time and money. But, they always have a backup for every risk they take.

3. Entrepreneur is a profit maker

An entrepreneur is an individual who establishes and manages the business for the principle
purpose of profit and growth.
4. Entrepreneur is an achievement motivator

David C. McClelland has initiated this concept of the entrepreneur by calling him “as per sun with
a strong desire for achievement.” Later on, Meredith and others have expressed the same concept
while they termed “entrepreneurs are action-oriented, highly’ motivated individuals.”Therefore,
entrepreneurs have to have a deep-rooted need for achieving their goals.

5. Passion:

Your work should be your passion. So when you work, you enjoy what you’re doing and stay
highly motivated. Passion acts as a driving force, with which, you are motivated to strive for better.

It also allows you the ability to put in those extra hours in the office which can or may make a
difference. At the beginning of every entrepreneurial venture or any venture, there are hurdles but
your passion ensures that you are able to overcome these roadblocks and forge ahead towards your
goal.

6. Creativity:

Creativity gives birth to something new. For without creativity, there is no innovation possible.
Entrepreneurs usually have the knack to pin down a lot of ideas and act on them. Not necessarily
every idea might be a hit. But the experience obtained is gold. Creativity
helps in coming up with new solutions for the problems at hand and allows one to think of solutions
that are out of the box. It also gives an entrepreneur the ability to devise new products for similar
markets to the ones he’s currently playing in.

7. Professionalism:

Professionalism is a quality which all good entrepreneurs must possess. An entrepreneurs

mannerisms and behavior with their employees and clientele goes a long way in developing the
culture of the organization.
Along with professionalism comes reliability and discipline. Self-discipline enables an
entrepreneur to achieve their targets, be organized and set an example for everyone.

Reliability results in trust and for most ventures, trust in the entrepreneur is what keeps the people
in the organization motivated and willing to put in their best. Professionalism is one of the most
important characteristics of an entrepreneur.

8. Knowledge:

Knowledge is the key to success. An entrepreneur should possess complete knowledge of his niche
or industry. For only with knowledge can a difficulty be solved or a crisis is tackled.

It enables him to keep track of the developments and the constantly changing requirements of the
market that he is in. May it is a new trend in the market or advancement in technology or even a
new advertiser’s entry, an entrepreneur should keep himself abreast of it. Knowledge is the guiding
force when it comes leaving the competition behind. New bits and pieces of information may just
prove as useful as a newly devised strategy.

He should know what his strengths & weaknesses are so that they can be worked on and can result
in a healthier organization.

A good entrepreneur will always try to increase his knowledge, which is why he is always a learner.
The better an entrepreneur knows his playground, the easier he can play in it.

9. Open-mindedness towards learning, people, and even failure:

An entrepreneur must be accepting. The true realization of which scenario or event can be a useful
opportunity is necessary. To recognize such openings, an open-minded attitude is required.

An entrepreneur should be determined. He should face his losses with a positive attitude and his
wins, humbly. Any good businessman will know not to frown on a defeat. Try till you succeed is
the right mentality. Failure is a step or a way which didn’t work according to the plan. A good
entrepreneur takes the experience of this setback and works even hard with the next goal in line.
10. Entrepreneur is a reward receiver

An entrepreneur is a person who creates something new of value by devoting time and efforts and
in turn receives monetary and personal rewards. Max Weber, Hartman, Hisrich and Peters have
recognized this distinct phenomenon of entrepreneurs.

11. Customer is everything:

A good entrepreneur will always know this; a business is all about the customer. How you grab a
customer’s attention is the first step. This can be done through various

mediums such as marketing and advertising. It is also important that you know the needs of your
customers. The product or service which is being created by your organization needs to cater to
the needs of your consumers. Personalizing a business for consumers will also boost the sales.

 THE READINESS FOR ENTREPRENEURSHIP

The readiness for entrepreneurship of individuals is defined as the confluence of a set ofpersonal
traits (or features) that distinguishes individuals
with readiness for entrepreneurship as especially competent to observe and analyze their
environment in such a way that they channel their high creative and productive

 Readiness depends on the following characteristics of an individual who possess to

perform the task effectively and efficiently. Personal entrepreneurial competencies
include the following:

a) Initiative
The entrepreneur should be able to take actions that go beyond his job requirements and to act
faster. He is always ahead of others and able to become a leader in the field of business. He Does
things before being asked or compelled by the situation and acts to extend the business into new
areas, products or services.
b) Sees and acts on opportunities
An entrepreneur always looks for and takes action on opportunities. He Sees and acts on new
business opportunities and Seizes unusual opportunities to obtain financing, equipment, land, work
space or assistance.

c) Persistence
An entrepreneur is able to make repeated efforts or to take different actions to overcome an
obstacle that get in the way of reaching goals. An entrepreneur takes repeated or different actions
to overcome an obstacle and Takes action in the face of a significant obstacle.

d) Information Seeking
An entrepreneur is able to take action on how to seek information to help achieve business
objectives or clarify business problems. They do personal research on how to provide a product
or service. They seek information or ask questions to clarify what is wanted or needed.They
personally undertake research and use contacts or information networks to obtain useful
information.

e) Concern for High Quality of Work

An entrepreneur acts to do things that meet certain standards of excellence that gives him greater
satisfaction. An entrepreneur states a desire to produce or sell a top or better quality product or
service. They compare own work or own company’s work favourably to that of others.

f) Commitment to Work Contract

An entrepreneur places the highest priority on getting a job completed. They make a personal
sacrifice or take extraordinary effort to complete a job. They accept full responsibility for problems
in completing a job for others and express concern for satisfying the customer.

g) Efficiency Orientation
A successful entrepreneur always finds ways to do things faster or with fewer resources or at a
lower cost.They look for or finds ways to do things faster or at less cost. An entrepreneur uses
information or business tools to improve efficiency. He expresses concern about costs vs. benefits
of some improvement, change, or course of action.
h) Systematic Planning
An entrepreneur develops and uses logical, step-by-step plans to reach goals.They plan by
breaking a large task into subtask and develop plans,then anticipate obstacles and evaluate
alternatives. They take a logical and systematic approach to activities.

i) Problem Solving
Entrepreneurs identify new and potentially unique ideas to achieve his goals.They generate new
ideas or innovative solutions to solve problems and they take alternative strategies to solve the
problems.

j) Self-Confidence
Entrepreneur with this competency will have a strong belief in self and own abilities.They express
confidence in their own ability to complete a task or meet a challenge.They stick to their own
judgment while taking decision.

k) Assertiveness
An entrepreneur confronts problems and issues with others directly.Entrepreneur with this
competency vindicate the claim to asset their own rights on others.They demand recognition and
disciplines those failing to perform as expected.They asset own competence,reliability or other
personal or company’s qualities.They also assert strong confidence in own company’s or
organization’s products or service.

l) Persuasion
Entrepreneurs with this competency successfully pursue others to perform the activities effectively
and efficiently. An entrepreneur can persuade or influence others for mobilizing resources,
obtaining inputs, organizing productions and selling his products or services.

m) Use of Influence Strategies

An entrepreneur is able to make use of influential people to reach his business goals. Entrepreneurs
with this competency influence the environment (Individuals/Institution) for mobilizing resources
organizing production and selling goods and services to develop business contacts.
n) Monitoring
Entrepreneurs with this competency normally monitor or surprise all the activities of the concern
to ensure that the work is completed by maintaining good quality.

o) Concern for Employee Welfare

Entrepreneurs with this competency take action to improve the welfare of employees and take
positive action in response of employee’s personal concerns

 MYTHS VS. REALITY OF ENTREPRENEURSHIP

Myth No. 1: Entrepreneurs are Essentially Inventors

Many aspirations die in the bud due to the existence of this perceived prerequisite.
Entrepreneurship is often confused with the invention, where it’s taken as a condition to be able to
tangibly invent an app, system, product or a new equation in order to create market value. For
example, the way Ola/Uber disrupted travel and Airbnb/Oyo Rooms disrupted hotel stays.

Reality: Entrepreneurs are Ideators

Entrepreneurship is a phenomenal journey which is flagged off with something as basic and simple
as an idea. Entrepreneurs arise from an existing gap, and the right idea to fill that gap. Once the
idea stands out as disruptive, innovation and invention automatically fall in line. Work it up to the
top before someone else works on it to build an empire.

Myth No. 2: Entrepreneurs are mainly motivated by Money

While money is the big game, it definitely isn’t the end game. Money making makes for a very
narrow viewpoint for those who certainly wish to establish a business. There are a larger passion
and a bigger purpose that every budding entrepreneur holds or must hold onto than just making
big bucks.
Reality: Entrepreneurs are Motivated by Passion

Most entrepreneurs believe in taking a risk and living life on the edge. They carry small phones
but wider visions, live on bare necessities but live for huger possibilities.

For any new business, the first few years are all about reaching a breakeven, profits become a part
once execution is patiently handled and aimed for. Passion is the biggest motivation.

Myth No. 3: Entrepreneurs Have to be Risk-takers

A myth almost ingrained in the market almost believed to be a fact. Risk taking is more of an
attitude when it comes to entrepreneurship. In the sea of bigger things, risk-taking is only one of
the sailing boats. Very often many fierce risk takers fail due to the lack of ability to be risk avengers
or that of being on the safe side of the spectrum at all times.

Reality: Entrepreneurs Have to be Challenge-takers

As an entrepreneur, all you need to be is a relentless challenger, which encompasses taking risks
as well as avoiding them. To pose your idea as the distinguisher, all that you need is the attitude
of a go-getter. The always prepared to face the adversity attitude should always come in play while
facing obstacles, financial ups-downs and severe, cut-throat competition. Nothing is as strong as a
strong will.

Myth No. 4: Entrepreneurs are Born

Where do we think they plan for the idea, while they develop in the womb? This is one of the
biggest scandals of a myth, which makes thousands of people miss the chance of being the next
big entrepreneur. Intelligence, high scores, family blood, none of these actually guarantees your
ticket to the top.

Reality: Entrepreneurs are Made

Nothing begets dedication, will-power and courage. You aren’t born an entrepreneur, you become
one. The greatest entrepreneurs come from very average set-ups with almost no fortune in the
bloodline. There will never be a shortcut to Hard work.

Myth No. 5: Entrepreneurship is Prone to High Failure

This myth represents every bit of anticipation and also hints of laziness. Those who are either too
scared or are too engulfed in the future, often become prey to this myth in their present. Forbes
once reported 90% of start-ups failed, and since then, this myth has grown to be an entrepreneurial
law. Truth is spoken, start-ups fail due to lack of proper planning and execution. And if all your
cards are well-timed, then this myth isn’t strong enough to keep you from taking the leap.

Reality: Entrepreneurship is Prone to Performance

A service or a product, entrepreneurship is the only performance of both in the market. Failure
always exists as a variable quotient but no statistical number can ever guarantee a success rate. As
a dedicated and ambitious professional, your task is to only focus your energy in making your set-
up perform, and when it heads a low point, not get scared but find resources to bring it back in
the game.

Well, myths like these and many more keep on sprouting like weeds in the field of
entrepreneurship. But the only and only reality to surpass them is to NOT believe in them. No
myth or in fact reality can be bigger than your aim, and if this becomes your motto, you’re the next
on the top list.
 ENTREPRENEURSHIP AND INTRAPRENEURSHIP: SIMILARITIES AND
VARIANCE

 SIMILARITIES BETWEEN INTRAPRENEURS AND ENTRAPRENEURS

1) Innovative Thinking

Innovative thinking is key as intrapreneurs and entrepreneurs aim to make their companies ahead
of the game. They need to look out for new opportunities, technologies, and methods to grow.

2) Doing for Innovation

Both entrepreneurs and intrapreneurs have to have the confidence of achieving success and the
willingness to fail. They take the leap and act on the ideas in their head.

3) Always Learning

To be ahead of the game, intrapreneurs and entrepreneurs need to continuously pick up new
information and new skills. Those skills may be business-related, product/service related, or skills
like creative thinking or marketing.

4) Flexibility

Things just don’t always go the way as expected or planned. If intrapreneurs and entrepreneurs are
not flexible with workload or schedules, their ventures may fail even before it gets off the ground.
They need to think on their feet and go with the flow.
5) No giving up

Both will face more failures than successes. In order to achieve success, intrapreneurs and
entrepreneurs need to be persistent.

Entrepreneurs and intrapreneurs go through similar processes

1. Process of innovation

Both entrepreneurs and intrapreneurs NEED to innovate. They need to pinpoint the market gap
and innovate accordingly. They need to thoroughly research existing products/services,
competitors, and patents/copyrights/trademarks.

2. Understanding the market

The way entrepreneurs and intrapreneurs gain an understanding of the market is essentially the
same. They have to research and keep validating by interviewing people and getting insights to
refine their products/services.

3. Prototyping

Entrepreneurs and intrapreneurs need to develop prototypes and minimum viable product (MVP)
to support their innovation.

4. Team building

Entrepreneurs and intrapreneurs need to build competitive teams. They need to bring a team
together and define culture and behavior. They define the roles and delegate work.
5. Funds

Entrepreneurs and intrapreneurs need to pitch to external or internal investors to fund their idea.
The pitching is very similar and competitive.

6. Deadlines

Entrepreneurs and intrapreneurs need to work on extremely tight schedules. They are often time
constrained due to the workload.

 DIFFERENCE BETWEEN ENTREPRENEURS AND INTRAPRENEURS

BASIS FOR
ENTREPRENEUR INTRAPRENEUR
COMPARISON

Meaning Entrepreneur refers to a person Intrapreneur refers to an employee of

who set up his own business with the organization who is in charge of
a new idea or concept. undertaking innovations in product,
service, process etc.

Approach Intuitive Restorative

Resources Uses own resources. Use resources provided by the

company.

Capital Raised by him. Financed by the company.

BASIS FOR
ENTREPRENEUR INTRAPRENEUR
COMPARISON

Enterprise Newly established An existing one

Dependency Independent Dependent

Risk Borne by the entrepreneur Taken by the company.

himself.

Works for Creating a leading position in Change and renew the existing
the market. organizational system and culture.

DEVELOPING CORPORATE ENTREPRENEURSHIP

 Corporate Entrepreneurship is a process used to develop new businesses, products, services

or processes inside of an existing organization to create value and generate new revenue growth
through entrepreneurial thought and action.

 5 Easy Steps to Unlock Rapid Corporate Entrepreneurship and Innovation

1. Collect and Validate Ideas From Corporate Stakeholders

The first step is to strategize with key corporate stakeholders including executives, board members,
and others. Through brainstorming, group discussion, and other crowdsourcing activities,
stakeholders can ideate around corporate entrepreneurship and innovation. What is the business
bad at? What does it need to approve upon? Bringing in the entire team early on prevents
miscommunication. The most successful corporate innovation strategies are backed by a well-
informed and motivated executive team.
 2. Establish Clear Corporate Innovation Goals and Objectives

With support from your business's executives, establish clear corporate innovation goals and
objectives. What does the enterprise want to accomplish? Establishing clear targets is a mission-
critical component of a high-powered corporate innovation program. Additionally, during
implementation, teams can benchmark progress against these predetermined goals.

To create realistic entrepreneurship and innovation goals, start by:

 Running internal and competitive benchmarking. How does your business stack up against the
competition in terms of innovation? A thorough market analysis is absolutely required.
 Making sure every entrepreneurship and innovation goal ties back to your broader mission and
vision.
 Examining who will be responsible for reaching these goals and identify the resources you'll
need to achieve or surpass those goals. Consider whether your goals can be measured.

3. Build Corporate Entrepreneurship and Innovation Teams

Most businesses build dedicated corporate entrepreneurship and innovation teams. The sole
purpose of this team is to oversee the implementation and management of corporate
entrepreneurship and innovation initiatives. A dedicated corporate innovation team will allow you
to pursue innovation activities without disrupting normal day-to-day operations.

4. Execute Corporate Innovation Strategy

Next, it's time to get started. If you're trying to launch a new product or service, start by validating
the solution, building a minimum viable product, committing to routine iteration, and achieving
product-market fit. When your new and innovative product or service aligns with customer wants
and preferences, it has a greater chance of succeeding in the marketplace.

"When customers are at the center of software development, they become your biggest champions
and the evangelists of your software. They have a voice, are empowered and can help steer future
innovation," says Francois Ajenstat, contributor at Forbes.
5. Join a Corporate Innovation Program

For an extra boost to your corporate entrepreneurship and innovation strategy, consider joining
a corporate innovation program. Members of these growth-oriented programs have an
opportunity to work with cutting-edge technologies such as robotics, artificial intelligence,
biomedical engineering tools, and more. There are a variety of program flavors to choose from and
finding the right innovation environment will orient your business towards rapid innovation
success.

WOMEN ENTREPRENEUR

Women entrepreneur may be defined as a woman or group of women who initiate, organize, and
run a business enterprise. In terms of Schumpeterian concept of innovative entrepreneurs, women
who innovate, imitate or adopt a business activity are called “women entrepreneurs”.

Kamal Singh who is a woman entrepreneur from Rajasthan, has defined woman entrepreneur as
“a confident, innovative and creative woman capable of achieving self-economic independence
individually or in collaboration, generates employment opportunities for others through initiating,
establishing and running the enterprise by keeping pace with her personal, family and social life.”

1. Courage

Courage is one of the most important characteristics of an woman entrepreneur. They many have
the passion to start their own business, it's the courageous ones who succeeds in their career.

2. Sound and strong mind with clear vision

A disturbed mind of the woman acts as a hindrance and she cannot achieve success in her venture.
There could be exceptional cases where such women could succeed in their chosen field, of course,
with great difficulty by crossing all the hurdles of life. A successful woman remained balanced
and stays calm under all circumstances and has a sound mind. She do not gets disturbed or panicky
for small setbacks in her ventures. A woman with a sound mind has the
ability to take the right decision which helps her to succeed in her business. She has the ability to
visualize the requirements of the society and is clear about the requirements of the society. A
successful woman always thinks out of the box to provide what is required in the most satisfying
way. This helps in achieving further success. She has a clear vision which forms the basis for a
successful career life, of course personal life too.

3. Self-confident and bold

Self-confidence is one of the most important characteristics for a successful life. A confident
woman has tremendous faith in herself and her abilities. She can easily resist the changes in the
consumer market and succeed in her business. A woman who is bold has the inner strength to face
and cross the hurdles of life, if any, with an open mind.

4. Goal oriented

Most of the successful business women set targeted goals in spite of their family responsibilities.
They work hard for achieving their set goal/s. Women who are goal oriented, work harder and
succeed in her business.

5. Hard working with an optimistic approach

A majority of successful women entrepreneurs have an optimistic approach. She is capable of

transforming her ideas into reality through her optimistic approach. They work hard with the hope
of success and do not give room to fear of failure in their mind. They remain strong and determined
during adverse situations and try to come out of it. Hard work is one of the greatest abilities of a
successful woman entrepreneur. She willingly works hard for achieving her goals. She takes up
every work with a challenging mind and with an orientation to achieve success. She doesn't take
up work for the sake of doing it or just for earning few bucks.

6. Capable of taking risks

She is capable of confidently taking risks and is efficient in making the risk, a rewarding one.
7. Assertiveness and decision making

A successful woman entrepreneur takes various decisions on various activities of her enterprise
with assertiveness. She takes firm decisions on the type of venture she undertakes and the way of
doing / handling it. She is clear, creative and assertive in her decision making.

8. Work-life balance

She can efficiently cope up with the stress levels in a better way by spending value time with her
children, spouse and family members. She very well knows how to balance her work-life which
is one of the keys to successful business. She makes time to spend with her children and supports
them in every possible way without any excuses of busy work life.

9. Build and develop their networks

One of the most prominent characteristics of a successful woman entrepreneur is she is keen on
meeting new people and thus tries to grow her business contacts. She readily socializes with people
whom she thinks are useful in developing her business. She will never miss the social events /
gatherings and she is keen on increasing her circle. She is a good relationship builder and develops
mutually beneficial relationship in the society.

10. Good organizer and manager

Good organizing skills and managerial skills are the important traits of a woman entrepreneur. She
is competent in developing / building a good organization. She efficiently co-ordinates with her
employees and effectively manages the finances / capital. To expand her business and achieve her
targeted goals, she occasionally organizes minor events like sales and exhibitions etc.
11. Leadership qualities

A successful woman entrepreneur exhibits high leadership qualities. She is capable of influencing
her employees and creates an enthusiastic work environment for them. She supports them in all
possible ways and encourages for a good team work to achieve targeted goals.

12. Profit-oriented and effective utilization of time

A successful business woman is mostly profit-oriented and focuses / works for her business
growth. A woman with a passion for becoming an entrepreneur should try to develop the above
mentioned traits, cross the hurdles with a determined mind and she is sure to have a successful
tomorrow.

 CHALLENGES AND PROBLEMS FACED BY WOMEN ENTREPRENEURS IN

INDIA

1. Family restriction

Women are expected to spend more time with their family members. They do not encourage
women to travel extensively for exploiting business opportunities.

In India, it is mainly a women’s duty to look after the children and other members of the family.
Man plays a secondary role only. In case of married women, she has to strike a fine balance
between her business and family. Her total involvement in family leaves little or no energy and
time to devote for business.

Support and approval of husbands seem necessary condition for women’s entry into business.
Accordingly, the educational level and family background of husbands positively influence
women’s entry into business activities.
2. Lack of Finance
Family members do not encourage women entrepreneurs. They hesitate to invest money in the
business venture initiated by women entrepreneurs. Bank and other Financial Institutions do not
consider Middle Class Women Entrepreneurs as proper applicants for setting up their projects
and they are hesitant to provide financial assistance to unmarried women or girls as they are unsure
as to who will repay the loan — Either their parents or in-laws after their marriage. This humiliates
unmarried women and they generally leave the idea of setting up their ventures.

For example, Kiran Mazumdar Shaw initially faced many problems regarding funds for her
business. Banks were hesitant to give loan to her as biotechnology was a totally new field at that
point of time and she was a woman entrepreneur, which was a rare phenomenon.

3. Lack of Education
Women are generally denied of higher education, especially in rural areas and under developed
countries. Women are not allowed to enrich their knowledge in technical and research areas to
introduce new products.

4. Role Conflict
Marriage and family life are given more importance than career and social life in Indian society.

5. Unfavorable Environment
The society is dominated by males. Many business men are not interested to have business
relationship with women entrepreneurs. Male generally do not encourage women entrepreneurs.

6. Lack of persistent Nature

Women generally have sympathy for others. They are very emotional. This nature should not allow
them to get easily cheated in business.

7. Lack of Mental strength

Business involves risk. Women entrepreneurs get upset very easily when loss arises in business.
8. Lack of Information
Women entrepreneurs are not generally aware of the subsidies and incentives available for them.
Lack of knowledge may prevent them from availing the special schemes.

9. Stiff Competition
Women face lot of competition from men. Due to limited mobility they find difficult to compete
with men.

10. Mobility
Moving in and around the market, is again a tough job for Middle Class Women Entrepreneurs
in Indian Social system.

11. Male-Dominated Society:

Male chauvinism is still the order of the day in India. The Constitution of India speaks of equality
between sexes. But, in practice, women are looked upon as abla, i.e. weak in all respects. Women
suffer from male reservations about a women’s role, ability and capacity and are treated
accordingly. In nutshell, in the male-dominated Indian society, women are not treated equal to
men. This, in turn, serves as a barrier to women entry into business.

 REMEDIAL MEASURES
Some of the remedial measures that can be undertaken to promote women entrepreneurship in
India, are as follows.

1. Promotional Help
Government and NGOs must provide assistance to entrepreneurs, both in financial and non
financial areas.

2. Training
Women entrepreneurs must be given training to operate and run a business successfully. Training
has to be given to women who are still reluctant to take up the entrepreneurial task.
3. Selection of Machinery and Technology
Women require assistance in selection of machinery and technology. Assistance must be
provided to them in technical areas so that the business unit become successful.

4. Finance
Finance is one of the major problems faced by women entrepreneurs. Both family and
government organizations should be liberal in providing financial assistance to them.

5. Marketing Assistance
Due to limited mobility, women are unable to market their goods. Assistance must be provided
to help them to market their goods successfully in the economic environment.

6. Family support
Family should support women entrepreneurs and encourage them to establish and run business
successfully.

 RURAL ENTREPRENEURSHIP

Definition of Rural Entrepreneurship

Rural Entrepreneurship defines the entrepreneurship whose origin lies in the rural areas whereas
has a lot of potentials to undertake various business, industry, agriculture and play a significant
role in the economic growth of the nation.

 IMPORTANCE OF RURAL ENTREPRENEURSHIP

1. Proper Utilization of resources
All the resources related to the business are available in the remote areas and the rural
entrepreneurship is associated with the proper and complete usage of all the materials to maximize
the profit. Directly and indirectly, this will be helpful for making improvements in the economic
and financial conditions of the rural areas. If the rural entrepreneurship does not exist, then it may
lead to proper wattage of all the available resources and this might be not in favour of any nation.
When there is the proper utilization of all the resources by the rural entrepreneurs, then this may
lead to increase productivity. On the other side, when the labour available in the rural areas gets
some work through these types of entrepreneurship, then it will also be helpful to eliminate
unemployment. Unemployed people get employed due to rural entrepreneurship.

2. Generation of employment opportunities

A huge number of employment opportunities generated because of the rural entrepreneurship for
the people who are living in these areas. A basic problem of any nation in today’s era is
unemployment and underemployment. This type of entrepreneurship gives ample new
opportunities to people and effectively tackle the problem in a very positive way.
Rural industrialization is labour intensive and provides great dealings to all rural people. People
from rural areas migrate to the urban areas in search of a job and it helps to decrease the migration
by offering similar opportunities for growth in their remote areas.

3. Plug the gap

There is always a huge gap between the remote areas and urban areas in terms of better education
as well as job opportunities for all. Rural Entrepreneurship helps to fill the gap by providing a
similar level of growth and development opportunities for people in rural areas and compete with
the urban areas too. It maintains a gap between the income in remote and the urbanareas.

4. Enhance traditional culture

All type of historic and ancient artistic activities was originated from rural areas and it is obvious
that people have immense talent in terms of tradition and culture. Rural entrepreneurship plays a
vital role in the promotion of artistic activities and helps them to create some brilliant handicraft
pieces and earn their bread and butter easily. In addition to this, the old-age artistic heritage is also
conserved by protecting as well as promoting the rural entrepreneurship.

5. Foster economic development

The economic development of remote areas fosters with the help of rural entrepreneurship. On the
one hand, it keeps control over the migration from rural areas to the urban areas and secondly,
increases the level of growth in all the areas equally. Differentiation between the areas
such as slum, towns and cities, etc, eliminates to a great extent. Apart from this, there is a
proportion of social tension and environmental pollution too.

6.Getting foreign exchanges

The products manufactured in rural areas is exported to the other nations across the world and in
this way, they will earn foreign exchanges. It also enhances the rural entrepreneurship and gives
a great push to the way of success.

7.Consider the taste of consumers

All the products manufactured by the rural entrepreneurship are according to the taste of the
customers and fulfil all the expectations what they want. Choice of each individual taken into
consideration and so, they produce jewellery, sarees, artistic materials that are produced serve all
the requirements of the customers.

8. Entrepreneurial development
In the remote areas, the development of entrepreneurship is enhancing by the rural
entrepreneurship. At the same token, it encourages the young generation and talented people to
come up with something new and carry out the entrepreneurial tasks in the rural sector. Hence, it
develops the rural areas also.

 TYPES OF RURAL ENTREPRENEURSHIP

1. Farm-based enterprise: This types of rural entrepreneurship comprises of different types of
farming which are mentioned below:
A.Organic and Floriculture

B.Medicinal plants

C.Commercial Forestry

2. Food processing and Agro waste

It is the most preferred activity and especially in rural areas. The market of this type of
entrepreneurship is expanding and tons of agro-waste is burning every day. Here is a very
straightforward option of turning the waste into briquettes which can be burnt in rural industries.
To exemplify, various products are there such as rice bran oil, Gum from tamarind seeds and others
can be extracted. Some other products are also made in rural areas such as handmade paper, board,
packing paper and corrugated paper boards.

3. Pesticide products
Presently, we are using the chemical fertilizers for crop cultivation at a great extent. Several types
of organic fertilizers such as compost, vermin-compost as well as neem based fertilizers can be
produced fro own use and to sell the same in urban areas also. These products are using a very low
level of energy and can be easily made out of wastes.

4. Animal Husbandry based enterprise

One of the most organized and popular enterprises is dairy farming and it can begin with two to
three animals to thousands of animals. This business is related to the production and distribution
of milk. Poultry will be next very popular enterprise as it includes the sale of eggs and the poultry
birds as well as the poultry feed industry which are also viable.
In addition to this, there is another option of commercial rearing of animals such as pigs, sheep,
rabbits and goats for wool and meat where the grass is easily provided to these animals.

5. Sericulture
Sericulture is also known as apiculture and it is a very old profession. It is undeniable that silk
garments are highly popular and it can also be shifted to the commercial level. Moreover, there are
no issues with the production of silk and processing silk. It is also beneficial to export the products
directly. Apart from this, pollination can also be done with the help of honey bees and maximizes
agriculture production.

6. Handloom
Hundreds of people are working in this industry in rural areas however the benefit has taken by
urban areas by selling the products produced by rural people. The rural entrepreneurs can also take
up this activity and get the entire profit by directly selling the products to urban areas and export
to other nations also.
There are many options for rural entrepreneurs however there is a need to take action regarding
the various resources available and its proper utilization.

 SOCIAL ENTREPRENEURSHIP

Social entrepreneurship can be defined as a way of doing business for identifying social issues in
society. The main motive behind this concept is doing research for defining a certain social
problem. This type of entrepreneurship assists in making a social change by applying a particular
set of processes, operations, and principles.
In addition to that, it is also ideal for creating research so that a certain social problem get identified
followed by using the right approach for solving it. Social ventures are organized, developed, and
managed by social entrepreneurs.

 ADVANTAGES
1. Applying Social Changes
The most convincing benefit of this entrepreneurship version is impact that it gives to society. The
people involved in this business develop businesses for a great sort of industries that affect society
positively.

2. Developing a stable employment

The main motive of social entrepreneurship is providing stable employment to society. It gives
something back to the people without any motive to make a profit.

3. Creating a wide group of volunteers

The philosophy of volunteering is highly involved in social entrepreneurship. They work for
boosting the positivity to the community. It can also be very useful for the welfare of people who
work as volunteers.
 DISADVANTAGES

1. Minimum public exposure and recognition

It is one of the bitter truth that social entrepreneurs have to deal is lack of advertisement among
public. Finding recognition for business is a very difficult task. Additionally, the majority of
individuals don’t put too much trust on social companies.

2. Lack of funding
There is a need for funding to support a venture irrespective of its nature. The majority of firms
find it difficult to get adequate funding due to lack of recognition all over the world. It is the major
issue about which the social entrepreneurs have to deal.
A great number of people get attracted towards social entrepreneurship as it allows them to help
society. However, there are tons of strings attached about which one can understand after the
experience.

Example of Social Entrepreneurship

One of the greatest examples of social entrepreneurship is Grameen Bank that was started by
Muhammad Yunis. This platform offers microcredit loans to individuals who seek assistance for
creating financial self-sufficiency. This company was started way back in 1983 and helped millions
of people until now.

 ENTREPRENEURSHIP DEVELOPMENT

Entrepreneurs are a very important cog in the machinery of a country’s economy. They are
absolutely essential to the survival and growth of the economy. This is why developing budding
Entrepreneurs is an important function.. Entrepreneur plays a vital role in economic development.
Entrepreneurs serve as the catalysts in the process of industrialization and economic growth.
Technical progress alone cannot lead to economic development, unless technological
breakthroughs are put to economic use by entrepreneurs.
Entrepreneurs initiate and sustain the process of economic development in the following
ways:
1. Capital Formation:
Entrepreneurs mobilize the idle savings of the public through the issues of industrial securities.
Investment of public savings in industry results in productive utilization of national resources. Rate
of capital formation increases which is essential for rapid economic growth. Thus, an entrepreneur
is the creator of wealth.

2. Improvement in Per Capita Income:

Entrepreneurs locate and exploit opportunities. They convert the latent and idle resources like land,
labour and capital into national income and wealth in the form of goods and services. They help
to increase net national product and per capita income in the country, which are important
yardsticks for measuring economic growth.

3. Generation of Employment:
Entrepreneurs generate employment both directly and indirectly. Directly, self-employment as an
entrepreneur offers the best way for independent and honorable life. Indirectly, by setting up large
and small scale business units they offer jobs to millions. Thus, entrepreneurship helps to reduce
the unemployment problem in the country.

4. Balanced Regional Development:

Entrepreneurs in the public and private sectors help to remove regional disparities in economic
development. They set up industries in backward areas to avail various concessions and subsidies
offered by the central and state governments.

Public sector steel plants and private sector industries by Modis, Tatas, Birlas and others have put
the hitherto unknown places on the international map.

5. Improvement in Living Standards:

Entrepreneurs set up industries which remove scarcity of essential commodities and introduce new
products. Production of goods on mass scale and manufacture of handicrafts, etc., in the small
scale sector help to improve the standards of life of a common man. These offer goods at lower
costs and increase variety in consumption.
6. Economic Independence:
Entrepreneurship is essential for national self-reliance. Industrialists help to manufacture
indigenous substitutes of hitherto imported products thereby reducing dependence on foreign
countries. Businessmen also export goods and services on a large scale and thereby earn the scarce
foreign exchange for the country.

Such import substitution and export promotion help to ensure the economic independence of the
country without which political independence has little meaning.

7. Backward and Forward Linkages:

An entrepreneur initiates change which has a chain reaction. Setting up of an enterprise has several
backward and forward linkages. For example- the establishment of a steel plant generates several
ancillary units and expands the demand for iron ore, coal, etc.

These are backward linkages. By increasing the supply of steel, the plant facilitates the growth of
machine building, tube making, utensil manufacturing and such other units.

Entrepreneurs create an atmosphere of enthusiasm and convey a sense of purpose. They give an
organization its momentum. Entrepreneurial behavior is critical to the long term vitality of every
economy. The practice of entrepreneurship is as important to established firms as it is to new ones.

 ENTREPRENEURIAL SUPPORT SYSTEMS

Entrepreneurs need strong support and advisory system in order to turn their startup ideas into
valuable businesses. Supporting entrepreneurship is essential for the development and
improvement of our lives. Modern-world society needs innovations and effective solutions for
existing problems. The bright and ambitious minds of entrepreneurs are to turn their break- through
ideas into successful companies with purpose, driven by their vision. By supporting entrepreneurs,
we support innovation.
It includes:

1. The law makers

The decision makers and law makers in the countries must work towards improving the business
environments for developing one strong entrepreneurial ecosystem. By making specific decisions
like tax alleviations for small businesses and entrepreneurs, any government can increase the
strength of the entrepreneurial system in the country.

2. The educators

Changes among educators, teachers and trainers must be made in order to stimulate the leadership
skills and natural talents of their students. Entrepreneurship can be instigated by implementing the
right methods and approaches. Not only entrepreneurs must be educated, the community as well
has to be educated about the importance of entrepreneurship, because the world needs innovation.

3. Entrepreneur communities

Entrepreneurs by themselves need to understand the importance of support, connections and

networking. Mentoring and leadership, spreading the knowledge and ideas can be just the first step
which entrepreneurs can take in order to help the entrepreneurial communities word wide to
flourish.

4. Friends and family

Choosing an entrepreneurial path is a very risky life choice which can lead to many life setbacks.
But the entrepreneurial spirit and innovative vision of entrepreneurs are the leading powers
supporting this very important decision. Being an entrepreneur has its challenges and giving up
the stable job and regular paycheck is one of these challenges.
Even that many of the first-time entrepreneurs are aware of the risks and are ready to face any
obstacles, there is one key factor which can affect the course of this important decision. The
support of family and friends is very important for entrepreneurs and startup owners. They are
already sacrificing a lot of their personal time which can affect their relationships with the others.
How can entrepreneurs handle unsupportive friends and family is one very difficult yet important
question to be answered.

5. Don’t argue – explain

Avoid arguing and getting into limitless conversations where you should explain every step you
take. It is tough but this is your life and you should live it the way you really want. Explain your
idea well to your family and friends. Make them believe in it. Explain to them that this is what you
really want and that you believe in it. Learn to stand up for your goals and to achieve them because
this is what you are supposed to do.

6. Don’t give up

When entrepreneurs face ultimatums from their closest people, this can damage the growth of their
business. Don’t give up just because your family and friends want you to do something else. They
are probably worried what will happen if you will fail. Keep working hard, because the realthing
that pays back is hard work, not self doubt.

7. Stay confident

Believe in your ability to turn your idea into successful business and sooner or later you will
succeed. Of course, it would be better if you had the strong support of your family and friends, but
you need to keep believing in yourself to make the rest of the world to believe in you too. Stay true
to your vision and find the support you need in your confidence.
 4 WAYS TO BUILD AN ENTREPRENEURIAL SUPPORT SYSTEM

1. Other business owners are an obvious entrepreneurial support system

It’s always a smart business move to get opinions and advice from other business owners—even
if they’re not in your industry. Make the time to connect over coffee, lunch, or even the phone if
there are location or time restrictions. I’ve recently met with several of my former employees,
who are now entrepreneurs themselves, which has led to new business. One of my former
staffers is my go-to IT person, which saves me time and money.

2. Mentors are great too

A psychologist friend of mine once told me, “People are afraid to ask for help because they don’t
like feeling vulnerable.” Asking for help from others often feels like we’re relinquishing some
degree of control over our own businesses. That’s especially hard for entrepreneurs to do, but the
value of having mentors is worth momentarily feeling vulnerable. I depend on my mentors for
advice and am happy to mentor others. It’s a win-win situation. If you don’t already have a
mentor, you can find free mentors at organizations like SCORE and networking organizations
such as MeetUp or your industry trade association. Once you have a mentor on your support
team, help is just a phone call or email away.

3. Professionals in other industries

According to a Barlow Research study conducted last year, when business owners were asked
who they turn to for advice, the number-one response was overwhelmingly their accountants.
Professionals such as accountants and attorneys are indispensable to have in your support
system. If you don’t want to pay fees to have these pros on contract, you can always pay on an
as-needed basis or sign up for online services such as LegalZoom, RocketLawyer,
or SmallBizAccountants.com.
 4. Online communities are highly accessible

You’ve probably already figured out you can find almost everything online, even a community
of like-minded entrepreneurs looking for (and willing to offer) advice and support. There are
hundreds of online communities you can join (such as American Express OPEN) and benefit
from. Check with your industry trade association for online communities specific to your market.

 ROLE OF GOVERNMENT IN ENTREPRENEURSHIP DEVELOPMENT.

Government plays a very important role in developing entrepreneurship. Government develops

industries in rural and backward areas by giving various facilities with the objective of balances
regional development. The government set programmes to help entrepreneurs in the field of
technique, finance, market and entrepreneurial development so that they help to accelerate and
adopt the changes in industrial development. Various institutions were set up by the central and
state governments in order to fulfill this objective.

 INSTITUTIONS SET UP BY CENTRAL GOVERNMENT

1. Small industries development organization (SIDO)

SIDO was established in October 1973 now under Ministry of Trade, Industry and Marketing.
SIDO is an apex body at Central level for formulating policy for the development of Small Scale
Industries in the country, headed by the Additional Secretary & Development
Commissioner(Small Scale Industries)under Ministry of Small Scale Industries Govt. of India.
SIDO is playing a very constructive role for strengthening this vital sector, which has proved to
be one of the strong pillars of the economy of the country. SIDO also provides extended support
through Comprehensive plan for promotion of rural entrepreneurship.

2. Management development Institute(MDI)

MDI is located at Gurgaon(Haryana).It was established in 1973 and is sponsored by Industrial

Finance Corporation Of India,with objectives of improving managerial effectiveness in the
 industry.It conducts management development programs in various fields.In also includes the
programmes for the officers of IAS,IES,BHEL,ONGC and many other leading PSU’s.

3. Entrepreneurship development institute of India (EDI)

Entrepreneurship Development Institute of India (EDI), an autonomous and not-for-profit institute,

set up in 1983, is sponsored by apex financial institutions – the IDBI Bank Ltd., IFCI Ltd., ICICI
Bank Ltd. and the State Bank of India (SBI). EDI has helped set up twelve state-levelexclusive
entrepreneurship development centres and institutes. One of the satisfying achievements, however,
was taking entrepreneurship to a large number of schools, colleges, science and technology
institutions and management schools in several states by including entrepreneurship inputs in their
curricula. In the international arena, efforts to develop entrepreneurship by way of sharing
resources and organizing training programmes, have helped EDI earn accolades and support from
the World Bank, Commonwealth Secretariat, UNIDO, ILO, British Council, Ford Foundation,
European Union, ASEAN Secretariat and several other renowned agencies. EDI has also set up
Entrepreneurship Development Centre at Cambodia, Lao PDR, Myanmar and Vietnam and is in
the process of setting up such centres at Uzbekistan and five African countries.

4. All India Small Scale Industries Board(AISSIB)

The Small Scale Industries Board (SSI Board) is the apex advisory body constituted to render
advise to the Government on all issues pertaining to the small scale sector.It determines the policies
and programmes for the development of small industries with a Central Government Minister as
its president and the representatives of various organization i.e. Central Government,State
Government,National Small Industries Corporations,State Financial Corporation,Reserve Bank of
India,State Bank of India,Indian Small Industries Board,Non government members such as Public
Service Commission,Trade and Industries Members.

5. National Institution of Entrepreneurship and Small Business

Development(NIESBUD),New Delhi
 It was established in 1983 by the Government of India.It is an apex body to supervise the activities
of various agencies in the entrepreneurial development programmes.It is a society under
Government of India Society Act of 1860.The major activities of institute are:

i) To make effective strategies and methods

ii) To standardize model syllabus for training

iii) To develop training aids,tools and manuals

iv) To conduct workshops,seminars and conferences.

v) To evaluate the benefits of EDPs and promote the process of Entrepreneurial Development.

vi) To help support government and other agencies in executing entrepreneur development
programmes.

vii) To undertake research and development in the field of EDPs.

6. National Institute of Small Industries Extension Training

It was established in 1960 with its headquarters at Hyderabad.The main objectives of national
Institute of Small Industries Extension Training are:

i) Directing and Coordinating syllabi for training of small entrepreneurs.

ii) Advising managerial and technical aspects.

iii) Organizing seminars for small entrepreneurs and managers.

iv) Providing services regarding research and documentation.

7. National Small Industries Corporation Ltd. (NSIC)

 The NSIC was established in 1995 by the Central Government with the objective of assisting the
small industries in the Government purchase programmes.The corporation provides a vast-market
for the products of small industries through its marketing network.It also assists the smallunits in
exporting their products in foreign countries.

8. Risk Capital and Technology Finance Corporation Ltd.(RCTFC)

RCTFC was established in 1988 with an authorized capital of 15 crores rupees.The main objectives
of RCTFC are provision of risk capital for the extension and expansion of entrepreneurial
development and venture capital for the projects with high techniques for technology development
and transfer.

9. Natioanl Research and development corporation (NRDC)

NRDC was established in 1953 under Department of Science and Industrial Research under
Government of India.Its main objectives are:

i) Providing assistance in technology transfer

ii) Transfer of technology

iii) Establishing relations with various technology institutions and collecting various indigenous
techniques developed by them.

10. Indian Investment Centre

This is an autonomous organization established by Central Government.Its main objective is to

assist in promoting foreign cooperation with Indian entrepreneurs and providing necessary
information to foreign entrepreneurs.

11. Khadi and village industries Commission(KVIC)

 Khadi and Village Industries Commission established by an Act of Parliament in 1956.It is a
service organization engaged in promotion and development of Khadi and Village Industries in
rural areas. Its main objectives are:

i) Providing employment in rural areas.

ii) Improvement of skills

iii) Rural Industrialisation

iv) Transfer of Technology

v) Building strong rural community base and self reliance among rural people.

12. Indian Institute of Entrepreneurship(IIE)

It was established by the Department of Small Scale Industries and Agro and Rural Industries in
1953.It is autonomous organization with its headquarters at Guwahati. Its main objective is to
undertake research,training and consultancy activities in the field of small industry and
entrepreneurship.

13. Miscellaneous Organisation

In addition to above various organizations at all India level are assisting and are engaged in
entrepreneur development. These include ICICI, IFCI, SIDBI, UTI, IDBI, IIBI etc.

14. National Alliance of Young Entrepreneurs(NAYE)

It has sponsored number of entrepreneurial development scheme in collaboration with various

public sector banks. The main objective of the scheme is to encourage young entrepreneurs to
explore investment and self –employment opportunities .It arranges for their training and assists
them in procuring necessary finance.In 1975 NAYE also set up a Women’s Wing to make women
self-relaint and to raise their status.
15. Centre for Entrepreneurial Development(CED) Ahmedabad

It was sponsored by the Government of Gujrat and public financial institutions operating in the
State. It conducts entrepreneurial development programmes at various centres.The important
features of training programme are:

i) Training programmes were conducted after survey for opportunities was made.

ii) Appropriate linkage was established with supporting agencies supplying finance,factory
sheds, raw materials, etc.

iii) Behavioral tests were conducted to select the entrepreneurs.

iv) Training programmes covered theoretical and practical aspects.

v) Full time project leader took follow up action after the training was over.

16. Institute for Entrepreneurial Development (IED)

It was set up by the IDBI in association with other financial institutions, public sector banks and
the State Governments. The IEDs was set up to fulfill the entrepreneurial development needs of
the industrially backward States in the country.

17. Technical Consultancy Organisation (TCOs)

A network of TCOs has been established by All India Financial Institutions and State Government
throughout the country. These organizations have been set up to provide comprehensive package
of services to entrepreneurs in general and to small business entrepreneurs in particular. Their main
functions include the following:
i) Identifying potential industrial project.

ii) Preparing project reports, feasibility reports and pre-investment status.

iii. Identifying potential entrepreneurs.

Providing technical and administrative support.

Conducting techno-economic studies of the projects.

Conducting market research and surveys.

Rendering advice to set up laboratories and design centre.

18. Public Sector Banks.

Public sector banks in association with NAYE have been conducting entrepreneurialdevelopment
programmes.The main thrust of these banks has been to identify potential entrepreneurs in rural
and backward areas.For example Punjab National Bank started entrepreneurial assistance
programme in March 1977 in th States of West Bengal and Bihar. Similarly,Bank of India started
entrepreneurial assistance programme since August 1972 in the States of Punjab, Rajasthan ,
Himachal Pradesh,J& k and the Union Territories of Chandigarh and Delhi.

The important Forms of entrepreneurial assistance are:

i) Identifying potential entrepreneurs

ii) Identifying viable projects.

iii) Assisting in preparation of project profiles

iv) Helping in project evaluation.

v) Arranging practical training.

vi) Financing the projects.

B) Institutions set up at State Level

There are a number of institutions establishes at state level for organizing, developing, assisting
and making successful entrepreneurial development programmes. Prominent among these are:

i) Small Industries Service Institute (SISI)

ii) State Financial Corporation (SFC)

iii) State Small Industries Corporation (SSIC)

iv) District Industries Centres (DIC)

v) Technical Consulting Organisation Ltd. (TCO)

vi) Industrial Directorates

vii) Commercial and Cooperative Banks

viii) State Industrial Development Corporation

ix) Industrial Estates

x) State Industries Corporation

The above mentioned State and Central level Institutions have provided a number of concessions
and facilities to promote entrepreneur development in India. They have also played an important
role in balanced industrial development in the country.
 UNIT II

ENTREPRENEURIAL MOTIVATION: CONCEPT AND THEORIES

 MEANING:

Entrepreneurial motivation is the process of transforming an ordinary individual to a powerful

businessman, who can create opportunities and helps in maximizing wealth and economic
development. It is defined as various factors stimulate desires and activates enthusiasm in
entrepreneurs which make them attain a particular goal.

Motivation makes entrepreneur by fulfilling higher level needs such as recognition, esteem, and
self-actualization. Various theories explained motivation as an influencing concept, it can bring
out hidden talents and creativity, and it contributes to the individual goals and society
development.

 CHARACTERISTICS OF MOTIVATION

1. Motivation is internal feeling of a person.

2. Motivation is a continuous process.

3. Motivation varies with person and time.

4. Motivation may be positive or negative.

 FACTORS RESPONSIBLE FOR THE ENTREPRENEURIAL MOTIVATION

1. Internal factors

2. External factors

1. Internal factors

a. Need for self-actualization

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

b. Optimism

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

c. Positive attitude

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

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

e. Enthusiasm

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

f. Commitment

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

g. Education

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

h. Background

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

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

2. External factors

a. Influence

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

b. Availability of resources

Resource availability motivates at a high extent to become entrepreneurs, availability of land,

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

c Product’s demand

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

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

e. Information availability

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

f. Technological advancement

Technological advancement acts as a path to transform ideas into products, feasibility in

production and expected success rate highly motivates to become entrepreneurs. It reduces errors
and cost of production and maximizes success rate, this is the reason why people are interested in
becoming entrepreneurs with the increase in technology

g. Changing tastes and preferences

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

1. MASLOW'S NEED HIERARCHY THEORY (1943)

Abraham Maslow postulated that a person will be motivated when his needs are fulfilled. The
need starts from the lowest level basic needs and keeps moving up as a lower level need is
fulfilled.

a. Basic physiological needs: the physiological needs relate to the survival and maintenance of
human life. These needs include such things as food, clothing, air, water and other necessaries of
life, which are biological in nature. These needs are primary needs.
b. Safety and security needs: after satisfying the physiological needs, people want the assurance
of maintaining a given economic level. They want job security, personal bodily security, security
of source of income, provision for old age, insurance against risks, etc.

c. Social needs: man is a social being. He is, therefore, interested in conversation, sociability,
exchange of feelings and grievances, companionship, recognition, belongingness, etc.

d. Esteem and status needs: these needs embrace such things as self-confidence, independence,
achievement, competence, knowledge and success. These needs boost the ego of individual. They
are also known as egoistic needs. They are concerned with prestige and status of the individual.

e. Self-fulfillment needs: the final step under the need priority model is the need for self-
fulfillment or the need to fulfill what a person considers being his mission in life. It involves
realizing one’s potentialities for continued self-development and for being creative in the broadest
senses of the word.

Maslow proposed that all human needs are kept as per rank of importance and human
behavior is to fulfill its needs as per importance rank and so he continuous in a proper
sequence but after fulfillment of a need another need arise. Moreover satisfied need will no
longer be a motivator and needs and wants are infinity.

2. HERZBERG’S MOTIVATION HYGIENE THEORY:

The psychologist Frederick Herzberg extended the work of Maslow and proposed a new
motivation theory popularly known as Herzberg’s Motivation Hygiene (Two-Factor) Theory.
Herzberg conducted a widely reported motivational study on 200 accountants and engineers
employed by firms in and around Western Pennsylvania.
He asked these people to describe two important incidents at their jobs:
(1) When did you feel particularly good about your job, and

(2) When did you feel exceptionally bad about your job? He used the critical incident method of
obtaining data.

Analyzing the responses of 200 accountants and engineers who were asked about their positive
and negative feelings about their work, Herzberg found 2 factors that influence employee
motivation and satisfaction.

1. Motivator factors –

Simply put, these are factors that lead to satisfaction and motivate employees to work harder.

Examples: Achievements, recognition etc

2. Hygiene factors –

These factors can lead to dissatisfaction and a lack of motivation if they are absent. Examples
include salary, company policies, benefits, relationships with managers and co-workers

3. MCGREGOR’S X AND Y THEORY:

Douglas McGregor formulated two distinct views of human being based on participation of
workers. The first basically negative, labeled Theory X, and the other basically positive, labled
Theory Y.

Theory X is based on the following assumptions:

1. People are by nature indolent. That is, they like to work as little as possible.

2. People lack ambition, dislike responsibility, and prefer to be directed by others.

3. People are inherently self-centered and indifferent to organizational needs and goals.

4. People are generally gullible and not very sharp and bright.
On the contrary, Theory Y assumes that:
1. People are not by nature passive or resistant to organizational goals.

2. They want to assume responsibility.

3. They want their organisation to succeed.

4. People are capable of directing their own behavior.

5. They have need for achievement

4. VROOM’S EXPECTANCY THEORY:

One of the most widely accepted explanations of motivation is offered by Victor Vroom in his
Expectancy Theory” It is a cognitive process theory of motivation. The theory is founded on the
basic notions that people will be motivated to exert a high level of effort when they
believe there are relationships between the effort they put forth, the performance they
achieve, and the outcomes/ rewards they receive.

Thus, the key constructs in the expectancy theory of motivation are:

1. Valence:

Valence, according to Vroom, means the value or strength one places on a particular outcome or
reward.

2. Expectancy:

It relates efforts to performance.

3. Instrumentality:

By instrumentality, Vroom means, the belief that performance is related to rewards.

Thus, Vroom’s motivation can also be expressed in the form of an equation as follows:
Motivation = Valence x Expectancy x Instrumentality

Being the model multiplicative in nature, all the three variables must have high positive values to
imply motivated performance choice. If any one of the variables approaches to zero level, the
possibility of the so motivated performance also touches zero level
5. Porter and Lawler’s Expectancy Theory:
In fact, Porter and Lawler’s theory is an improvement over Vroom’s expectancy theory. They
posit that motivation does not equal satisfaction or performance. The model suggested by them
encounters some of the simplistic traditional assumptions made about the positive relationship
between satisfaction and performance. They proposed a multi-variate model to explain the
complex relationship that exists between satisfaction and performance.

What is the main point in Porter and Lawler’s model is that effort or motivation does not
lead directly to performance. It is intact, mediated by abilities and traits and by role perceptions.
Ultimately, performance leads to satisfaction,.

There are three main elements in this model. Let us briefly discuss these one by one.

a) Effort:

Effort refers to the amount of energy an employee exerts on a given task. How much effort an
employee will put in a task is determined by two factors-

(i) Value of reward and

(ii) Perception of effort-reward probability.

b) Performance:

One’s effort leads to his/her performance. Both may be equal or may not be. However the amount
of performance is determined by the amount of labour and the ability and role perception of the
employee. Thus, if an employee possesses less ability and/or makes wrong role perception, his/her
performance may be low in spite of his putting in great efforts.

c) Satisfaction:

Performance leads to satisfaction. The level of satisfaction depends upon the amount of rewards
one achieves. If the amount of actual rewards meet or exceed perceived equitable
rewards, the employee will feel satisfied. On the country, if actual rewards fall short of perceived
ones, he/she will be dissatisfied.

Rewards may be of two kinds—intrinsic and extrinsic rewards. Examples of intrinsic rewards
are such as sense of accomplishment and self-actualization. As regards extrinsic rewards, these
may include working conditions and status. A fair degree of research support that, the intrinsic
rewards are much more likely to produce attitudes about satisfaction that are related to
performance.

6. McClelland’s theory of needs

McClelland affirms that we all have three motivating drivers, and it does not depend on our
gender or age. One of these drives will be dominant in our behaviour. The dominant drive
depends on our life experiences.

The three motivators are:

 Achievement: a need to accomplish and demonstrate own competence People with a

high need for achievement prefer tasks that provide for personal responsibility and results
based on their own efforts. They also prefer quick acknowledgement of their progress.

 Affiliation: a need for love, belonging and social acceptance People with a high need for
affiliation are motivated by being liked and accepted by others. They tend to participate
in social gatherings and may be uncomfortable with conflict.

 Power: a need for control own work or the work of others People with a high need for
power desire situations in which they exercise power and influence over others. They
aspire for positions with status and authority and tend to be more concerned about their
level of influence than about effective work performance.
 ENTREPRENEURIAL STRATEGY

 MEANING:

Entrepreneurial strategy is the means through which an organization establishes and re-
establishes its fundamental set of relationships with its environment. It is strategy characterized
by widespread and more-or-less simultaneous change in the pattern of decisions taken by an
organization.

 5 STRATEGIES FOR SUCCESS AS AN ENTREPRENEUR

Entrepreneurs can come from different backgrounds and utilize varying skill sets to achieve their
goals. However, a careful study of entrepreneurship shows there are a few shared strategies that
can help entrepreneurs succeed in the early stages of their career. Let’s take a look at some of
the strategies employed by the most successful entrepreneurs:

1. Learn from prior work experience. Many entrepreneurs don’t become successful overnight:
they often begin at the bottom of a traditional corporate totem pole. Starting out as an
employee, rather than an entrepreneur, is an opportunity to learn how organizations work. Use
your early job roles to observe how management teams make strategic decisions and to
develop the humility, resilience, and competitiveness you will need as a leader of a startup
business.

2. Develop a diverse set of skills. In many ways, an entrepreneur is a full-time problem- solver
first and foremost. Therefore, it’s important for an entrepreneur to develop a wide skill set in
various fields so that they are prepared to tackle different types of problems in their eventual
leadership roles. Start by analyzing your own strengths and weaknesses, and seek to fortify
your knowledge base in areas that you’re unfamiliar with. For instance, if you are great at
coming up with innovative ideas but lack a fundamental understanding of
 business administration, try shadowing someone who works in that field to learn from them.
3. Identify a problem that needs solving, then solve it. The best entrepreneurs build their
businesses by surveying the landscape, identifying a problem, and then constructing a business
idea that seeks to solve that problem. For instance, Amazon recognized that online shopping
was complicated and non-intuitive, and solved that problem by creating a streamlined interface
with a vast inventory.
4. Surround yourself with people you trust. Your primary job as an entrepreneur and leader
is to build a team of people with diverse experiences and expertise but like-minded values.
Seek to recruit candidates with two essential characteristics: domain expertise in a skill base
beyond your own, and a value system in alignment with your own.
5. Remain curious. Curiosity is one of the most important traits for entrepreneurs of every age.
To constantly learn and maintain your competitive edge, you must always seek out new
people and new experiences. Never lose the curiosity to see around corners.

 GENERATION OF NEW ENTRY OPPORTUNITY, ENTRY STRATEGY: RISK

REDUCTION STRATEGIES

1. NEW ENTRY

a. New entry refers to:

 Offering a new product to an established or new market.
 Offering an established product to a new market
 Creating a new organization

b. Newness is both positive and negative.

1. Newness can help differentiate a firm from its competitors.
2. However, newness creates a number of challenges for entrepreneurs.
C.Entrepreneurial strategy

–The set of decisions, actions, and reactions that first generate, and then exploit over time, a new
entry.
D The elements of an entrepreneurial strategy are:

1. The generation of a new entry opportunity, the result of a combination of knowledge and other
resources into a bundle that will be valuable, rare, and difficult for others to imitate.

2. The exploitation of a new entry opportunity.

3. A feedback loop

E.If the entry warrants exploitation, then firm performance depends on

1. The entry strategy; the risk reduction strategy.

2. The way the firm is organized.

3. The competence of the entrepreneur and the management team.

F.Long-run performance is dependent upon the ability to generate and exploit numerous
new entries.

II. GENERATION OF A NEW ENTRY OPPORTUNITY

A. Resources as a Source of Competitive Advantage.

1. Resources are the basic building blocks to a firm’s performance.

a. These resources are the inputs into the production process.

b.These can be combined in different ways to achieve superior performance.

2. These resources need to be considered as a bundle rather than just the resources that make up
the bundle.
3.In order for a bundle of resources to be the basis of a firm’s superior performance,the resources
must be valuable, rare, and inimitable.

4. A bundle of resources is:

a. Valuable

When it enables the firm to pursue opportunities, neutralize threats,and to offer products and
services that are valued by customers.

b. Rare when it is possessed by few, if any, competitors.

2. Market knowledge

It refers to the entrepreneur’s possession of information, technology, know-how, and skills that
provide insight into a market and itscustomers.

a. The entrepreneur shares some of the same knowledge that customers have about the use and
performance of products.

b. The entrepreneur’s market knowledge is deeper than the knowledge that could be gained
through market research.

c. Entrepreneurs who lack this intimate knowledge are less likely to recognize or create attractive
opportunities for new products and/or new markets.

d. The text again uses the example of mountain bikers who were aware of the problems that they
personally encountered.

e. Because these bike enthusiasts had an intimate knowledge of the market, they were able to
bring together resources in a way that provided a solution to customers’ dissatisfaction.

3. Technological knowledge

It refers to the entrepreneur’s possession of information, technology, know-how, and skills that
provide insight into ways to create new knowledge.
III. ASSESSING THE ATTRACTIVENESS OF A NEW ENTRY OPPORTUNITY

A. The entrepreneur needs to determine whether a new product is in fact valuable,

rare,and inimitable.

B. Information on a New Entry.

1. Prior knowledge and information search can also help assess the attractiveness of an
opportunity.

a. More prior knowledge means the entrepreneur starts from a position of less ignorance.

b. Knowledge can be increased by searching for information on the attractiveness of the new
entry opportunity.

c. A longer search period gives the entrepreneur more time to gain more information about
customer demand and protection from imitation.

d. However, there are costs associated with this search in terms of money and time.

2. Window of Opportunity.

a. When the window of opportunity is open, the environment is favorable for entrepreneurs to
exploit a new product.

b. However, the window of opportunity may close.

c. The time spent in collecting additional information increases the likelihood that the window of
opportunity will close.

C. Comfort with Making a Decision under Uncertainty.

1. The trade-off between more information and the window of opportunity’s closing presents a
dilemma.
2. The entrepreneur can commit an error of commission over an error of omission, or vice versa.

3. An error of commission occurs from the decision to pursue the new entry opportunity only to
find that the entrepreneur overestimated his or her ability to create customer demand.

4. An error of omission occurs from the decision not to act on the new entry opportunity, only to
find out later that the entrepreneur underestimated his or her ability to create customer demand.

D. Decision to Exploit or Not to Exploit the New Entry.

1. The decision on whether to exploit or not to exploit the new entry opportunity depends on
whether the entrepreneur has sufficient information to make decision and whether the window is
still open.

2. This decision depends on the stock of information and on the entrepreneur’s level of comfort
with making a decision without perfect knowledge.

3. The assessment of a new entry’ attractiveness is less about whether the opportunity “really”
exists and more about whether the entrepreneur believes he or she can make it work.

IV ENTRY STRATEGY FOR NEW ENTRY EXPLOITATION

A. Being first can create advantages that can enhance performance.

1.First movers develop a cost advantage.

a.The first mover is also able to move down the “experience curve.”

b.The firm can spread its fixed costs over a greater number of units (economies of scale) as well
as learn by trial and error (learning curve.)

2. First movers face less competitive rivalry.

a. First movers enjoy a rapidly growing market.

b.In the growth stage, firms are more concerned with keeping up with demand than they are with
taking market share from others.
3.First movers can secure important channels.

a. First movers can select and develop strong relationships with the mostimportant suppliers and
distribution channels.

b.This may represent a barrier to those considering entry.

4.First movers are better positioned to satisfy customers: They have the chance to:

a. Select and secure the most attractive segments of a market.

b. Position themselves at the center of the market.

c. Establish their product as the industry standard.

5. First movers gain expertise through participation: They can:

a. Learn from the first generation of products and improve.

b.Monitor changes in the market that might be difficult to detect for firms not in the market

.c.Build up their networks.

6. Many first movers with new products in new markets have been surpassed by firms that
entered later.

V.RISK REDUCTION STRATEGIES FOR NEW ENTRY EXPLOITATION

A.A new entry involves considerable risk for the entrepreneur.

1. Risk refers to the probability and magnitude of downside loss

2.The risk comes from uncertainty over market demand, technological development, and the
actions of competitors.

B. Market Scope Strategy.

1. Scope is a choice by the entrepreneur about which customer groups to serve and how to serve
them.
2. Narrow-scope strategy offers a small product range to a small number of customer groups.

 RISK REDUCTION STRATEGIES

1. Risk Acceptance: Risk acceptance comes down to “risking it.” It’s coming to terms that the
risk exists and there is nothing you will do to mitigate or change it. Instead, it understands the
probability of it happening and accepting the consequences that may occur. This is the best strategy
when risk is small or unlikely to happen. It makes sense to adopt risk when the cost of mitigating
or avoiding it will be higher than merely accepting it and leaving it to chance.

2. Risk Avoidance: If a risk from starting a project, launching a product, moving your business,
etc. is too large to accept, it may be better to avoid it. In this case, risk avoidance means not
performing that activity that causes the risk. Managing risk in this way is most like how people
address personal risks. While some people are more risk-loving and others are more risk-averse,
everyone has a tipping point at which things become just too risky and not worth attempting.

3. Risk Mitigation: When risks are evaluated, some risks are better not to avoid or accept. In this
instance, risk mitigation is explored. Risk mitigation refers to the processes and methods of
controlling risk. When you identify risk and its probability, you can allocate resources for
management.

4. Risk Reduction: Businesses can assign a level at which risk is acceptable, which is called the
residual risk level. Risk reduction is the most common strategy because there is usually a way to
at least reduce risk. It involves taking countermeasures to decrease the impact of consequences.
For example, one form of risk reduction is risk transfer, like that of buying insurance.

5. Risk Transfer: As mentioned, risk transfer involves moving the risk to another third party or
entity. Risk transfers can be outsourced, moved to an insurance agency, or given to a new entity
as is what happens when leasing property. Risk transfers don’t always result in lower costs. Instead,
a risk transfer is the best option when it can be used to reduce future damage. So, insurance can
cost money, but it may end up being more cost-effective than having the risk occur and being solely
responsible for reparations.
 CREATIVITY AND BUSINESS IDEA GENERATION
 CREATIVITY MEANING:

The term creativity refers to the ability to produce something that is both new and valuable. Good
education, proper care and provision of opportunities to inspire, stimulate and sharpen the creative
mind and it is in this sphere that parents, society and teachers make a significant contribution.

The term ‘creativity’ or creative process has been defined in many ways:
1. “Creativity implies the products of totally or partially novel identity”—Stagner and Karowski.

2. “Creativity is the capacity of a person to produce composition products or ideas which are
essentially new or novel and previously unknown to the producer”— Drevdahl.

3. “Creativity is the power of the human mind to create new contents by transforming relations
and thereby generating new correlates”—Spearman.

 NATURE AND CHARACTERISTICS OF CREATIVITY

a. Creativity is not confined to any individual:

Creativity is not confined to any individual, group of individuals, caste, colour or creed. It is not
bound by the barriers of age, location or culture.

b. Creativity is innate as well as acquired:

Although many research findings and incidents favour the suggestion that creativity is a God given
gift and natural endowment, the influence of cultural background, experiences, education and
training in the nurturing of creativity cannot be ruled out. Thus one’s creativity may be correctly
said to be a function of natural endowment as well as its nurturing. It is a combination of responses
or ideas in novel ways.
c. Creativity is adventurous and open thinking:
Creativity is not a product of the stereotyped, rigid and closed thinking. It encourages and demands
complete freedom to accept and express the multiplicity of responses, choices and ways of action.

d. Creativity carries ego involvement:

There is complete involvement of one’s ego in the creative expression. One’s individuality and
identity are totally merged in one’s creation. Here ‘I’ is given more weightage.

e. Creativity has a wide scope:

Creative expression is not restricted by any limits or boundaries. It covers all fields and activities
of human life in any of which one is able to demonstrate creativity by expressing or producing a
new idea or object.

 What is Idea Generation?

Idea generation is the creative process or procedure that a company uses in order to figure out
solutions to any number of difficult challenges. It involves coming up with many ideas in a group
discussion, selecting the best idea or ideas, working to create a plan to implement the idea, and then
actually taking that idea and putting it into practice. The idea can be tangible, something you can
touch or see, or intangible, something symbolic or cultural.

How it Works

Sam is a marketing manager for a shoe company, and he has about eight people who work for him.
Sam is a big fan of using idea generation with his team whenever they need to tackle a new
challenge. The team has a new project this month. They have to come up with a brand new way
of marketing the newest line of shoes to a previously unaddressed target audience. Sam puts his
group to work into pairs.

Each pair tackles the task by first thinking of many ideas, far more than they would ever use. The
pair will eventually rejoin the team, and the team will select the best idea or ideas before assessing
the ideas' worth on a focus group of potential customers at a later date. After feedback
from the focus group, the team will adjust their approach and build on the idea using the focus
group feedback before putting their plan through real testing or trials. Finally, when the team is
confident in their idea, the idea will be passed on for actual business implementation. In our
example with Sam and his team, their marketing plan will be employed by the company to target
their new customer demographic.

This general process structure is used across many types of businesses for many types of decisions.
There is no rule saying that a company must follow this exactly, so don't be surprised if you
encounter variation. If it seems like a long process, that is because it is. Some aspects require ample
time, like conducting research, gathering opinions, learning about competitors, testing the idea,
and improving on the idea after testing. Individual teams or companies will also find that some
techniques work better for them than others, and that's just fine. Knowing a wide range of idea
generation techniques allows for flexibility in a decision making process.

 SEVEN CREATIVE IDEA GENERATION SOURCES AND METHODS.

1 The 5W+H Method

Although it may seem like a random set of numbers at first glance, the 5W+H method is a really
meaningful way to cope with the creative drought. The technique represents basic questions you
need to ask when thinking about a specific topic: Who, what, where, when, why, and how?

Jason Richardson, a content creator at essay papers, shared his thoughts with us: “If you answer
each of the 5W+H questions precisely – regardless of the topic – you can get one step closer to
solving your problem. These answers should stimulate your brain to rethink the whole subject and
find a new angle of looking at things.”

#2 Social Listening

Idea generation doesn’t mean you have to come up with a great suggestion single-handedly. On
the contrary, sometimes it’s enough to do a little bit of social listening and see what the target
audience has to say about a certain topic. You can use social networks like Facebook or Twitter
to find precious ideas coming from end-users.
Besides that, you can always organize an opinion poll to directly ask people what they want. For
example, a platform such as Survey Monkey allows you to launch a simple survey within minutes,
so it can be used as the idea generation tool.

#3 Brainstorming

Brainstorming is a well-known method that people all over the world use for decades already.
What makes this tactic so popular? Well, it’s the fact that no one gets laughed at for proposing a
stupid idea. There is no right or wrong here – you just need to say the first thing that comes to your
mind and that’s it. After a quick brainstorming session, you just need to filter through all
suggestions and find the ones that have the biggest potential to succeed.

#4 Role Playing

Walking in someone else’s shoes is everything but easy, but sometimes it’s the only way to break
the barrier and think of a brilliant idea. The process is simple: you just need to switch places with
your colleagues and try to embrace their point of view. It doesn’t guarantee immediate results, but
it often leads to interesting conclusions and brand new ideas.

#5 Use Online Tools

The Internet is filled with interesting tools that can assist you in identifying alternative ideas. You
can choose between many different options, but the final decision usually depends on the nature
and peculiarities of your business. However, we can definitely recommend a couple of valuable
platforms here:

o Evernote: Nothing hurts like coming up with amazing solutions and forgetting it along the
way. Evernote prevents this because it allows you to write down every thought instantly.
o Ninja Essays: It’s a team of incredibly creative authors who can help you to brainstorm and
craft high-quality topics for your websites, blogs, or research papers.
#6 Mind Mapping

Mind mapping is another method to get through the creative drought successfully. By definition,
a mind map is a diagram for representing tasks, words, concepts, or items linked to and arranged
around a central concept or subject using a non-linear graphical layout that allows the user to build
an intuitive framework around a central concept.

Let’s say you are writing a screenplay. In this case, you can put the main character in the center of
the map and then add links leading to all other elements of your movie – from plot and love
relationships to supporting roles.

#7 Think In Reverse

The last solution on our list is very amusing. Instead of thinking about how to reach your goal, you
can think about how not to achieve it. For example, you can make a plan on how to reduce the
number of Instagram followers instead of increasing it. The so-called negative thinking often leads
people to unbelievable conclusions, which in turn brings them a bunch of new ideas.

#8. The Storyboarding Method

A storyboard is like a cartoon strip: you place pictures or written words to do with ideas, one
after the other, on a sheet of paper. Then, you try to develop a story through them. When you
storyboard ideas for an ideating session, you take ideas from everyone, write each down on a
sticky note, paste it on a board, and then try to form a story around it. It’s a great way to see how
these ideas interact and see if there is a connection that can be made among them.

#9. Synectics
Synectics is usually classified as a Creative Problem-Solving (CPS) Technique along with
Brainstorming and Lateral Thinking. This problem solving methodology inspires thought
processes that the subject might not be aware of. The credit for developing the technique that
had its beginnings in the 1950s in the Arthur D. Little Invention Design Unit goes to George
M. Prince and William J.J. Gordon.

The process was gathered from tape recorded (starting with audio with video coming later)
meetings, assessment of the outcomes, and experiments with other methods of coping with the
barriers to achievements, in the meeting.

The term “Synectics” has its origins from the Greek language and means the combining of
different and supposedly irrelevant elements. Though Synectics is a trademarked name, it has
turned into a standard word for delineating Creative Problem Solving that takes place in groups.
This idea generation technique approaches problem solving and creativity in a rational manner.

#10. TRIZ (or TIPS – Theory of Inventive Problem Solving)

It was created by Genrich Altshuller and his coworkers. It is a Russian method of problem solving.
This strategy is meant to cultivate the creation of patentable inventions. However, the technique is
also helpful for developing non-product solutions.

In the beginning, following the invention of bulletproof glass, a trade off happened. Though the
glass would prevent the bullet from entering, the former would crack to such an extent that the
vision of the pilot or driver behind the glass would be obscured. TRIZ has a considerable list of
principles for settling trade offs. In this particular case, the pertinent principle was segmentation
for which the solution was to create a huge pane of glass from smaller panes. This was to ensure
that the cracks were limited to the one small pane. If you are capable of articulating your trade off,
the chances are high that TRIZ has methods to triumph over it that have proved successful with
respect to other problems.

11. SCAMPER
The basis for SCAMPER is the belief that everything new is a variation of something already in
existence. SCAMPER is an acronym, and each letter indicates a different method by which the
person can toy around with the features of whatsoever it is that is challenging him to come out
with new ideas. The letters and their full forms are as follows:

S = Substitute

C = Combine

A = Adapt

M = Magnify

P = Put to Other Uses

E = Eliminate (alternative is Minify)

R = Rearrange (alternative is Reverse)

To utilize the SCAMPER technique, start by stating the problem you wish to solve or the thought
you wish to develop. This thought/idea can be anything: a product, process or service you wish to
improve, a challenge in business, or other problem. Once you have identified the challenge, you
need to come up with questions. Utilize the SCAMPER checklist for guidance. Here’s a sample:

S: What to substitute in my process of selling?

C: How do I blend selling with other activities?

A: What to copy or adapt the selling process of another person or company?

M: What do I put more weight on or magnify when selling?

P: What other uses can I put my selling to?

E: What do I eliminate or make easier in my process of selling?

R: How do I change, reverse or reorder my manner of selling?

With the help of these questions, you are pushed to a different viewpoint with respect to your
problem and ultimately come up with original solutions.

 CREATIVE PROBLEM SOLVING

Creative Problem Solving may be defined as a problem solving technique that addresses a
challenge or problem in a creative manner. The solution is creative because it is not obvious. To
meet the criteria for solving a problem in a creative manner, the solution should resolve the
declared problem in an original manner with the solution being reached independently. This idea
generation strategy usually incorporates a team approach. This is owing to the fact that people
inside the workplace are allowed to engage in the process of change in their search for creative
solutions.

There are six stages in the Osborn-Parnes process of creative-problem solving.

1. Objective Finding

Pinpointing the challenge or goal and delineating your preferred output is the basis of the CPS
strategy. At times, people pay no heed to certain essential aspects about the problem or take
something for granted to solve it rapidly. This causes an obscurement of the thought process, and
the person fails to take note of the big picture. Delineating the goal or objective provides a lucid
idea pertaining to the problem that facilitates the investigation of various possible solutions to it.

2. Fact Finding

Collecting information pertaining to the problem and associated data is essential for
comprehending the problem. At this stage, make a list of key details such as what and who is
involved, assumptions and perceptions, viewpoints of interested parties, feelings and facts, and so
on so that you may begin the process of crafting ideas.

3. Problem Finding

Using the problem objective and gathered data as a basis, determine possible challenges that may
come about and the possible opportunities that are present inside of it. This would assist you with
concentrating on the problem. It is so simple to move your attention away from the aim and to
come up with answers to the incorrect problems.

4. Idea Finding

Reusing a solution when we come across a problem that we possibly encountered before, is a very
easy process. Our mind detects ‘conceptual blocks’ that comprise hurdles such as commitment,
complacency, compression, and constancy. These hinder us from thinking creatively and
developing fresh concepts or ideas. Thus, it is essential to investigate, brainstorm and determine
as many probable solutions as you can.

5. Solution Finding

After you’ve done with coming up with new ideas and noting down probable solutions in list
fashion, assess them to determine whether they meet your specification for success and can be
executed. Improvise, reinforce and select the best idea. Make sure that the solutions are not only
creative, but also useful. At times, will power is the sole solution.

6. Acceptance Finding

You have selected the best probable solution that is both actionable and satisfies the requirements
for success. The next thing to do is to plan your steps for action by lucidly describing
responsibilities and determining the best method to utilize the available resources. The calls for
action that you put out should be comprehended by all associated with the problem solving process
so that it becomes an accepted solution.

different models pertaining to creativity thinking namely “parallel thinking” and lateral thinking.
The creativity practitioner created the two models over many years with “Mechanism of the Mind”
– his book, coming out in print in 1969.
 CREATIVITY IN ENTREPRENEURSHIP

1. Creation of innovative ideas: The entire procedure of entrepreneurship rotated around the
creation and exploration of some innovative ideas. When an entrepreneur gets innovative that
is efficient and in favour of the business, then they can stay ahead o the curve and beat the
competition in a very proper manner. It is a kind of learning skill that is possessed by some
individuals to explore some inventive ideas and thoughts that can create a huge difference and
help the business to stay always in the hit list.

2. Novel ways to develop and improve the products: Creativity is all the way associated with
making changes in the products or services in such a way that it creates something different.
Chances of improvement in any product are high but it just needs some sort of creative thinking
to know what is missing in the products. This thing can only be assessed by a creative
entrepreneur.

3. Thinking out of the world: The intention and imagination of producing something different
with unique ideas are called Creativity. Imagination is always must to cross the boundaries
between the normal and unique and come up with something that can help you think outside
of the box. The creative entrepreneur always thinks out of the world and replaces the traditional
solutions with inventive ones. Creativity meant to be creates something new, interesting and
versatile to get some potential.

4. Searching the same patters but the areas are different: Somehow, due to monotonous
routine and surroundings, we always go with the same procedures all the time. A connection
between the dissimilar and unrelated subjects allows creativity to happen and make some
successful ideas for entrepreneurship. The creation of new niches comes by merging the
different ideas and fields which may give something innovative and interesting intersection.
There is no fear of bringing the various disciplines together but some may have however
interesting ideas comes by mixing the different fields
5. Growth of new niches with creativity and entrepreneurship: It is vital to explore the new
aspects of conventional business in the entrepreneurship. It can be done in various ways such
as by changing the manufacturing techniques, mode of delivery or make some changes in the
service or product. All these changes create a big difference in business strategies and give
birth to a new niche.

6. Startup success is not enough: Sometimes, the entrepreneurs get some initial ideas that
establish a creative image of the entrepreneur in the eyes of the people and they think that it
is not required to be creative again in the future. But this is not at all enough to succeed in the
avenue of business as creativity keeps a business to remain ahead of the curve.

7. A table full of untraditional ideas: Conventional thinking leads to the same procedure for a
long time if everyone is doing a particular work in the same way. But if you want to succeed,
then you have to challenge the conventional techniques and bring something new in the
marketplace. The breed of creativity is Disruption.

8. Become a solution: Creativity is not just a flash of motivation but sometimes, the great
designers, artists and writers fail in front of the creativity. Continuous working on the problem
is the only solution to make it right.

ENTREPRENEURIAL INNOVATION

The concepts of innovation and entrepreneurship are undeniably interrelated:

Innovation is the specific tool of entrepreneurs, the means by which they exploit change as
an opportunity for a different business or a different service. It is capable of being presented
as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to
search purposefully for the sources of innovation, the changes and their symptoms that
indicate opportunities for successful innovation. And they need to know and to apply the
principles of successful innovation (Drucker, 1985, p. 19).
 Drucker (1985) argued that innovation should be viewed as an economic or social phenomenon
rather than a technological term. Innovation is not about making new inventions, but rather about
recognizing how to take advantage of opportunities and changes: “Systematic innovation therefore
consists in the purposeful and organized search for changes, and in the systematic analysis of the
opportunities such changes might offer for economic or social innovation” (p. 35). This is
consistent with Schumpeter’s (1934) view that innovation arises from new combinations of
materials and forces.

 TYPES OF INNOVATION

1. Organizational Innovation
Organizational innovation refers to the development of a new organizational strategy that will
somehow change a company’s business practices, as well as the way its workplace is organized
and its relationship with external stakeholders.

 Examples of organizational innovations:

 The first companies adopting a four-day week working schedule of only 4 days per week
 The first companies that started to use the power of digital and allowing employees to skip the
office and work from home (depending on the role)

2. Process Innovation
Process innovation is about implementing a new or improved production or delivery approach,
including changes in operational methods, the techniques used and the equipment or software.

 Examples of process innovations:

 The first firms betting on SaaS (software as a service) technology, and using, for instance, cloud
contact centers from Talkdesk, changed the way their customer support processes used to be
organized
 The first hotels that decided to make decisions based on big data using, for instance, insights from
the Climber Hotel, made changes on their decision-making approach
 3. Product Innovation
Product innovation is the introduction of a new or improved good or service. These inventions or
changes may have to do with improving technical specifications, the materials or the software used
or even advancing on UX (user experience). However, product innovations don’t need to improve
all functions or performance specifications. An improvement to or addition of a new function can
also be merged with a loss of other functions or the downgrade of some other specifications.
Moreover, a product innovation must add available to potential users but doesn’t necessarily need
to generate sales. Because if it did, then innovations with low demand or, for instance, digital
products like apps that are free would be excluded. At the same time, routine changes or updates
aren’t considered product innovations as they are only correcting errors or making some seasonal
changes.

 Examples of product innovations:

 Lego has been changing the materials of its famous bricks to biodegradable oil-based plastics
 The first electric vehicles introduced in the car’s market were also an innovation, and new
batteries with longer ranges that keep coming out are also an example of innovation

4. Marketing Innovation

Marketing innovation means developing a new marketing strategy that produces changes in, for
instance, the way a product is designed or packed, or even other decisions regarding price or
promotion.

 Example of marketing innovation:

 Haagen Dazs’ new waste-free container
OPPORTUNITY RECOGNITION AND OPPORTUNITY ASSESSMENT PLAN

The key to successful domestic and international entrepreneurship is to develop an idea that has a
market with a need for the product or service idea conceived.

• Opportunity assessment is often best accomplished by developing an opportunity assessment

plan.

• An opportunity assessment plan is not a business plan.

 AN OPPORTUNITY ASSESSMENT PLAN HAS FOUR SECTIONS: –

--The first section develops the idea, analyzes competitive products and companies, and
identifies the unique selling propositions.

– The second section focuses on the market—its size, trends, characteristics, and growth rate.

– The third section focuses on the entrepreneur’s and management team’s skills and experience.

– The final section develops a time line indicating the steps to successfully launch the venture.

 PRODUCT PLANNING AND DEVELOPMENT PROCESS.

Product planning is a technique of planning all the aspects of a product in its relationship with the
market. It answers several basic questions related to the product such as what type of product?
How much, when, where, at how much, for whom etc. In answering all these questions, a marketer
tries to match the products of the company with the market expectations.

The aim of product planning is to avoid designing of unsuitable products and all the related
expenses. The present day customer will not accept any product which does not suit his
requirements in any way-price, style, designing, features, distribution etc. Product planning is
always done keeping in mind the market or consumer expectations
 Product Planning and Development Step
1. Generation of New Product Ideas:
The first step in product planning and development is generation of ideas for the development of
new/innovative products.

Ideas may come from internal sources like company’s own Research and Development (R&D)
department, managers, sales-force personnel etc.; or from external sources like, customers, dealers,
competitors, consultants, scientists etc.

2. Screening of Ideas:
Screening of ideas means a close and detailed examination of ideas, to determine which of the
ideas have potential and are capable of making significant contribution to marketing objectives. In
fact, generation of ideas is not that significant as the system for screening the generated ideas.

The ideas should be screened properly; as any idea passing this stage would cost the firm in terms
of time, money and efforts, at subsequent stages in product planning and development.

3. Product Concept Development:

Those product ideas which clear the screening stage must be developed into a product concept –
identifying physical features, benefits, price etc. of the product. At this stage product idea is
transformed into a product concept i.e. a product which target market will accept.

4. Commercial Feasibility:
At this stage, the purpose is to determine whether the proposed product idea is commercially
feasible, in terms of demand potential and the costs of production and marketing. Management
must also ensure that product concept is compatible with the resources of the organization
technological, human and financial.
5. Product Development:

Product development encompasses the technical activities of engineering and design. At this stage,
the engineering department converts the product concept into a concert form of product in view of
the required size, shape, design, weight, colour etc. of the product concept.

A model or prototype of the product is manufactured on a limited scale. Decisions are also made
with regard to packaging, brand name, label etc. of the product.

6. Test Marketing:
A sample of the product is tested in a well-chosen and authentic sales environment; to find out
consumers’ reaction. In view of consumers’ reactions, the product may be improved further.

7. Commercialization:
After the management is satisfied with the results of test marketing, steps are taken to launch a
full-fledged programme for the production, promotion and marketing of the product. It is the stage
where the new product is born; and it enters it life cycle process.

 Product Planning Process – 8 Main Objectives

i. To meet the customer needs – Successful marketing lies in identifying and meeting customer
needs. Product planning is a technique which enables identification and meeting of customer needs
through working with the customers and securing their feedback. This makes possible delivering
customer satisfaction.

ii. To increase the sales – Product planning enables a company to manufacture appropriate
products which satisfy customer expectations and thereby increase sales.

iii. To optimally utilize resources – Every company has limited resources in terms of money,
material and human resources. Product planning enables the company to make the best use of such
limited resources by channelizing them towards the most appropriate products.
iv. To analyze the company’s strengths and weaknesses – Product planning analyzes the
strengths and weaknesses of the company in the light of the market requirements. This enables the
company to consolidate on its strengths and overcome its weaknesses.

v. Survival of the firm – Product planning enables a company to survive in a highly competitive
market through its components such as product innovation, renovation and elimination.

vi. Commercial success – Product planning enables a company to achieve commercial success
by coordinating the activities of all the specialists in the company who contribute to the product’s
performance in the marketplace. This is done through product development teams, marketing
executives, quality managers and sales representatives.

vii. Achieving the goals of marketing management – Product management and marketing
management share similar objectives, which are to maximize revenue and profit by meeting
customer needs. Product managers work closely with marketing managers, using research from
the marketplace to plan and prioritize product development programs, and briefing marketing
teams on the benefits of new products so that they can develop effective customer communications.

viii. To plan effectively – A key objective for product management is planning and developing
the specifications for a range of products or a product portfolio that meets the long-term strategic
plan. The strategic plan may require development of new products to meet the needs of new market
sectors or improvements and extensions to the current product range to increase share in the
existing sectors.

ix. To conform to time schedules – Product managers have to meet time and budget objectives.
To meet the demands of the market and counter competitive pressures, they must be able to
conclude product development programs on time and on budget. That enables your company to
reduce the time to bring new or improved products to market and stay ahead of your competitors.
 LEGAL ISSUES IN SETTING UP THE ORGANIZATION

1. INTELLECTUAL PROPERTY RIGHTS (IPR)

⮚ INTRODUCTION

Introduction Small scale industries are very important for the growth of the Indian economy. It
has a significant contribution in the exports, employment generation etc and recorded higher
growth than the other industrial units. Therefore, MSME sector has higher contribution for the
development of the economy in the country. Hence, government is making continuous efforts to
exploit the potential of the MSME’s to the fullest but because of the small size these industries
are facing problems in the marketing, production, technology, capital, skilled manpower etc.
which leads to the industrial sickness. Thus, the future of these MSME’s is in dark. It is a matter
of concern that how these industries can be made competitive. The intellectual property rights
can be one solution to make these industries competitive and can help in generating wealth.

Intellectual Property (IP) deals with any basic construction of human intelligence such as
artistic, literary, technical or scientific constructions. Intellectual Property Rights (IPR) refers to
the legal rights granted to the inventor or manufacturer to protect their invention or manufacture
product. These legal rights confer an exclusive right on the inventor/manufacturer or its operator
who makes full use of it’s his invention/product for a limited period of time.

IPR is a strong tool, to protect the investment, time, money, and effort invested by the
inventor/creator of the IP, as it gives the inventor/creator an exclusive right for a certain period
of time for the use of its invention/creation. Thus, IPR affects the economic development of a
country by promoting healthy competition and encouraging industrial growth and economic
growth.

⮚ MEANING OF INTELLECTUAL PROPERTY

Intellectual Property can be defined as inventions of the mind, innovations, literary and artistic
work, symbols, names and images used in commerce. The objective of intellectual property
protection is to encourage the creativity of the human mind for the benefit of all and to ensure
that the benefits arising from exploiting a creation benefit the creator. This will encourage
creative activity and give investors a reasonable return on their investment in research and
development.

⮚ MEANING OF INTELLECTUAL PROPERTY RIGHTS

The intellectual property right is a kind of legal right that protects a person’s artistic works,
literary works, inventions or discoveries or a symbol or design for a specific period of time.
Intellectual property owners are given certain rights by which they can enjoy their Property
without any disturbances and prevent others from using them, although these rights are also
called monopoly rights of exploitation, they are limited in geographical range, time and scope.

As a result, intellectual property rights can have a direct and substantial impact on industry and
business, as the owners of IPRs one can enforce such rights and can stop the manufacture, use, or
sale of a product to the public. IP protection encourages publication, distribution, and disclosure
of the creation to the public, rather than keeping it a secret and to encourage commercial
enterprises to select creative works for exploitation.

⮚ NATURE OF INTELLECTUAL PROPERTY

1. Intangible Rights over Tangible Property:

The main Property that distinguishes IP from other forms of Property is its intangibility. While
there are many important differences between different forms of IP, one factor they share is that
they establish property protection over intangible things such as ideas, inventions, signs and
information whereas intangible assets and close relationships are a tangible object. In which they
are embedded. It allows creators or owners to benefit from their works when they are used
commercially.

2. Right to sue:

In the language of the law, IP is an asset that can be owned and dealt with. Most forms of IP are
contested in rights of action that are enforced only by legal action and by those who have rights.
IP is a property right and can, therefore, be inherited, bought, gifted, sold, licensed, entrusted or
pledged. The holder of an IPR owner has a type of Property that he can use the way he likes
subject to certain conditions and takes legal action against the person who without his consent
used his invention and can receive compensation against real Property.

3. Rights and Duties:

IP gives rise not only to property rights but also duties. The owner of the IP has the right to
perform certain functions in relation to his work/product. He has the exclusive right to produce
the work, make copies of the work, market work, etc. There is also a negative right to prevent
third parties from exercising their statutory rights.

4. Coexistence of different rights:

Different types of IPRs can co-exist in relation to a particular function. For example, an
invention may be patented, and the invention photograph may be copyrighted. A design can be
protected under the Design Act, and the design can also be incorporated into a trademark. There
are many similarities and differences between the various rights that can exist together in IP. For
example, there are common grounds between patent and industrial design; Copyright and
neighbouring rights, trademarks and geographical indications, and so on. Some intellectual
property rights are positive rights; the rest of them are negative rights.

5. Exhaustion of rights:

Intellectual property rights are generally subject to the doctrine of exhaustion. Exhaustion
basically means that after the first sale by the right holder or by its exhaustion authority, his right
ceases and he is not entitled to stop further movement of the goods. Thus, once an IP rights
holder has sold a physical product to which IPRs are attached, it cannot prevent subsequent
resale of that product. The right terminates with the first consent. This principle is based on the
concept of free movement of goods which is in force by consent or right of the rights holder. The
exclusive right to sell goods cannot be exercised twice in relation to the same goods. The right to
restrict further movements has expired as the right holder has already earned his share by the act
of placing goods for the first sale in the market.

6. Dynamism:

IPR is in the process of continuous development. As technology is rapidly evolving in all areas
of human activities, the field of IP is also growing. As per the requirement of scientific and
technological progress, new items are being added to the scope of IPR, and the scope of its
preservation is being expanded. Bio Patents, Software Copyrights, Plant Diversity Protection,
these are few names which reflect contemporary developments in the field of IPR. The
importance of intellectual property and its mobility is well established and reflected at all levels,
including statutory, administrative and judicial.

⮚ WHY PROMOTE AND PROTECT INTELLECTUAL PROPERTY?

There are several reasons for promoting and protecting intellectual property. Some of them are:
1. Progress and the good of humanity remain in the ability to create and invent new works in
the field of technology and culture.
2. IP protection encourages publication, distribution, and disclosure of the creation to the
public, rather than keeping it a secret.
3. Promotion and protection of intellectual Property promote economic development, generates
new jobs and industries, and improves the quality of life.

Intellectual Property helps in balancing between the innovator’s interests and public interest,
provide an environment where innovation, creativity and invention can flourish and benefit all.

⮚ KINDS OF INTELLECTUAL PROPERTY

The subject of intellectual property is very broad. There are many different forms of rights that
together make up intellectual property. IP can be basically divided into two categories, that is,
industrial Property and intellectual property. Traditionally, many IPRs were collectively known
as industrial assets.

It mainly consisted of patents, trademarks, copyright, and trade secret. Now, the protection
of industrial property extends to utility models, service marks, trade names, passes, signs of
source or origin, including geographical indications, and the suppression of unfair competition. It
can be said that the term ‘industrial property” is the predecessor of ‘intellectual property”.

1. Copyright

Copyright does not protect ideas. Rather, it only covers “tangible” forms of creations
and original work–for example, art, music, architectural drawings, or even software codes. The
copyright owner has the exclusive right to sell, publish, and/or reproduce any literary, musical,
dramatic, artistic, or architectural work created by the author.

2. Patent

A patent is used to prevent an invention from being created, sold, or used by another party
without permission. Patents are the most common type of intellectual property rights that come
to people’s minds when they think of intellectual property rights protection. A Patent Owner has
every right to commercialize his/her/its patent, including buying and selling the patent
or granting a license to the invention to any third party under mutually agreed terms.

3. Trademark

Trademarks are another familiar type of intellectual property rights protection. A trademark is a
distinctive sign which allows consumers to easily identify the particular goods or services that a
company provides. Some examples include McDonald’s golden arch, the Facebook logo, and
so on.

4. Trade Secret

Trade secrets are the secrets of a business. They are proprietary systems, formulas, strategies, or
other information that is confidential and is not meant for unauthorized commercial use by
others. This is a critical form of protection that can help businesses to gain a competitive
advantage. Examples of trade secrets include recipes for certain foods and beverages (like Mrs.
Fields’ cookies or Sprite), new inventions, software, processes, and even different marketing
strategies.

⮚ ADVANTAGES OF INTELLECTUAL PROPERTY

There are many advantages to IP, including the following:

1. There are no fees associated with IP

2. Ability to have a competitive edge over other similar businesses
3. IP enhances your company’s value
4. IP helps you market your company’s products and services
5. You can more easily obtain financing for your business
6. Greater export opportunities

There is no fee if you want to enhance or change your invention, particularly if it isn’t formally
protected. With that said, you should consider applying for formal patent protection once you’ve
finished developing your product.
If you have patent protection over your intellectual property, then you will inevitably have a
competitive edge over the competition. This is because other businesses operating in the same
industry cannot copy, manufacture, use, or sell your product.
Intellectual property can help generate even more income for your business through licensing
agreements or the sale of your invention. If you sell your business, it will be worth more if you
have intellectual property protection. Such a sale can occur through a partial sale, full sale,
merger, or acquisition.
You can easily market your business’s products and services if you have patent or trademark
protection over your intellectual property. This can include the design of your product or logo. It
can help you differentiate your business over others to draw in potential consumers.
If you have intellectual property protection, you can more easily obtain financing from lenders
and other financial institutions since it enhances your credibility with such protection.
Your business will have greater export opportunities since intellectual property can increase your
competitive edge in the export markets. Therefore, you can use designs to market goods
internationally. To do this, you can enter into franchising agreements with international
businesses that are located in countries where you want to do business or export your patented
products. This can help increase profits drastically by reaching the international market across
several countries.

⮚ DISADVANTAGES OF INTELLECTUAL PROPERTY

While there are several advantages, there are some disadvantages of intellectual property, too,
including the following:

1. Additional costs
2. Pirating
3. Reduced quality

Protecting your intellectual property could cost a lot of money, particularly if you have a very
complex product that involves designs, methods, and processes. Therefore, you could be filing
several patent applications to protect one product. In addition, if you hire a lawyer to assist in the
application process, you can expect to pay high legal costs. You’ll also need to pay filing fees
and other costs associated with the patent application process.
When it comes to highly sought-after intellectual property, it is hard to stop consumers from
taking such intellectual property. Furthermore, any attempt to enforce intellectual property
rights could reduce a company’s customer base.
As intellectual property rights become reduced, so too will the quality of the product being
created. That is because there is much less of an incentive to do the work and put the time and
resources in, especially if the company knows that its intellectual property rights aren’t absolute.
PATENT

⮚ MEANING:
Patents are one of the oldest forms of intellectual property protection. The basic aim of a patent
system is to encourage economic and technological development by rewarding individual
creativity and/or intellectual. A patent under the act is a grant from the government to inventors,
for a limited period of time, the exclusive right to make, use, exercise, and vend the invention.

⮚ WHAT CAN BE PATENTED?

The Indian Patent Act, 1970 has notified the nature of patentable inventions.

Processes Methods of production, research, testing, analysis, and other

technologies with new applications.

Machines Products, instruments, machines, and other physical objects

that have proved useful and unique in nature.

Manufactures Combination of physical matter not found in nature

fabricated in unique and useful application.

Compositions of Chemical compounds, medicines, and botanical

Matter compositions that do not exist in nature in an uncultivated
state, nor those that could evolve in nature, better new and
useful

⮚ TYPES OF PATENTS:
The Patent Law classifies all the patents into three types:
1. Utility Patents.

2. Design Patents.

3. Plant Patents.
1. Utility Patents.

Patents granted for new products, processes, machines, methods of manufacturing, and
composition of matter come under the category of utility patents. This is the most common
patents sought by the inventors. It is granted for 17 years. The utility patents exclude most of
botanical creations related to plant and agricultural use.

2. Design Patents:

Design Patents are granted for any new or original ornamental design for an article of
manufacture. Examples are shoe companies such as Reebok and Nike that have become more
interested in design patents as a means of protecting their ornamental designs. What is the most
important element in the design patent is that it protects the appearance (say, design) of the
article, not the article itself.

For example, dozens of bicycle manufacturers manufacture their bicycles for exercise and
fitness. These bicycles use similar principles of dynamic tension. Nonetheless, the bicycle
manufacturers design their bicycles so that these appear different and unique.

3. Plant Patent:

Plant Patent is granted for any new variety of plant that has been asexually reproduced by an
inventor. The new plants may be patented only when the inventor satisfies the patent office that
the new plant did not exist in nature or in an uncultivated state. Like utility patent, a plant patent
provides the protection for 17 years.

⮚ ADVANTAGES OF PATENTS
Patents have a number of advantages, the main one being that they allow you to be the only party
who can profit from the production, use, or sale of your invention. The protections include
reverse engineering, which means that if someone else manages to figure out how your invention
works, they still cannot legally produce it themselves.

Another advantage is the fact that a patent can help startups secure investor financing for their
company. Investors see patented inventions as more secure than un-patented ones, and are
therefore more likely to provide investment funds.

Finally, the protection afforded by a patent isn’t limited by your company’s internal security. It
extends to all instances where someone might attempt to duplicate your invention.
⮚ DRAWBACKS OF PATENTS
While patents can provide very strong IP protection, they aren’t perfect. One of the primary
disadvantages of a patent is the fact that it requires significant upfront investment. Filing the
documentation needed to secure a patent can be a lengthy, tedious, and expensive process,
particularly if you want to make absolutely certain your invention is protected.

Often, certain inventions may not be legally patentable, or it may be difficult to define your
invention in such a way that it prevents other parties from getting away with creating something
similar to it, but not enough to fall under patent protection.

Additionally, patents require you to make your invention and it’s workings public, which may
not always be desirable. By making schematics public, it may be possible for your competitors to
find workarounds that allow them to profit off your ideas while technically staying outside the
reach of your patent. This is often a problem with software and technology.

TRADEMARK
⮚ MEANING:

A trademark is a brand or a logo that you use to distinguish your product from those of your
competitors. The term Trademark is the legal term for “intellectual property”.
One can also say that a Trademark is typically a name, word, phrase, logo, symbol, design,
image or a combination of these elements. A trademark identifies the brand owner of a particular
product or service.

⮚ WHAT IS TRADEMARK REGISTRATION?

Trademark Registration is a legal procedure provided under the Trade Marks Act, 1999. Through
trademark registration or you can say logo registration/brand registration, you can protect your
brand or logo by restricting other people from using the same. By trademark registration, you get
the ownership of the logo / name / brand.

The trademark registration process in India is required if a company or individual intends to

protect their logo from the misuse by the third party. Trademark registration would provide a
legal right to initiate an action against the third party in case of infringement of trademark.
Trademark registration will also provide an exclusive right to the owner to use it for its products
or services.

⮚ NECESSITY / IMPORTANCE OF TRADEMARK REGISTRATION

A Trademark protects your brand and provides you with the tools to prevent someone from
riding on the back of your business. Trademark is capable of distinguishing the goods or services
of one person from those of others and includes the shape of goods, their packaging, and a
combination of colors. Let us know more reasons of Importance of Trademark Registration in
India.

1. Valuable Assets
A registered trademark may prove to be a valuable assets for your company / Business. These
assets keeps on appreciating over time. As your business grows over time, the value of the
trademarks gets scaled up automatically. So, if your business grows, your trademark also grows
in value.

2. Protection to your Brand

A registered trademark establishes ownership over the brand, name or logo. It protects your
brand from any unauthorized use of the third party. The registered trademark proves that the
product totally belongs to you and you have exclusive rights to use, sell, and modify the brand or
goods in whichever manner you want.

3. Provides Uniqueness to Brand

A brand that is unique and different must be registered as every business needs a brand or logo
that stands out, which differentiates your brand from that of others. Hence, a registered
trademark gives a unique identity to your brand.

4. Easy Communication tool

Yes, Trademarks may prove to be an effective and easy communication tool. They speak for
themselves. A registered trademark can be easily identified which brand your product belongs to.
For example, when you see a silver color half bitten apple on any device, be it a laptop or a
phone, you can easily identify that it is an Apple product.

5. Easy for customers to find

A registered trademark makes it easy for customers to find the product. As it is an effective tool
and unique in its identity, the trademarks that are registered can be easily traceable and
customers may reach your product easily.
6. Trademark is forever
Trademark once registered can last for eternity. The Trademark registered by any firm remains
with them forever. Yes, the trademark registration shall be renewed after every 10 years.
However, the identity that it gave to the brand remains forever.

⮚ TYPES OF TRADEMARKS THAT CAN BE REGISTERED IN INDIA

The following are a few types of trademarks which can be registered in India.

1. Words and service marks

Where word marks refer to any marks that are used to identify the products and services of a
trading company or a service-providing company. While the service marks are indicating the
services that a company is dealing in.

2. Shape marks

Shape marks are the marks which are the shapes of the product or packaging of the business.
Appearance of the product can distinguish the product from other products.

3. Logos and symbols

Logos and symbols are the printed figure / design or character or painted design or figures that
indicate the company’s name, service or product’s name.

4. Collective marks

When the marks are linked with a group of people or services collectively It is said to be the
Collective Mark. The trademark is owned by the organization but it can be used by multiple
people.

5. Series Marks

These are the marks which are registered to use before or after a chain of products where there
would be a common suffix / prefix or symbol.

6. The Certification mark

This is a mark which proves that the company has met with the standards and quality of the
products. This would make the public aware of the fact that a particular company’s product has
met the standards laid down by the certifying body.
It is always advisable to register your Trademark to save the same from unauthorized use by
someone else.
⮚ ADVANTAGES OF TRADEMARK REGISTRATION

1. Exclusive Rights:

The owner of Registered Trademark enjoys exclusive right over the trademark. The owner can
use the same for all the products falling under the class (es) applied. Further, the owner can enjoy
the sole ownership of the Trademark and can stop other from the unauthorized use of the
Trademark under the same class where it is registered. It gives the right to sue the unauthorized
user of the Trademark Registered.

2. Builds trust and Goodwill:

The established quality of your product and services are known by everyone through the
trademark and which establishes trust and goodwill among the customers in market. It helps in
creating permanent customers who are loyal and always opt for the same brand.

3. Differentiates Product:

It makes easy for customers to find your products. It makes your product and identity of products
different from that of the existing and foreseen competitors and acts as efficient commercial tool.
The logo can communicate your vision, quality or unique characteristic of your company and
any organisation.

4. Recognition to product’s Quality:

It gives recognition to the quality of the product. Customers attach the product’s quality with the
brand name and this image is created in the market about the quality of a particular brand which
helps in attracting new customers as they can differentiate the quality of a product by the
logo/brand name.

5. Creation of Asset:

Registration of Trademark creates an intangible asset i.e. Intellectual Property for an

organisation. Registered trademark is a right created which can be sold, assigned, franchised or
commercially contracted. Also, the Trademark is an intangible asset which gives the advantage
to the organisation.

6. Use of ® symbol:

Once the trademark is registered you can use the ® symbol on your logo stating that it is a
registered trademark and no one can use the same trademark. It is exclusive of all types of usages
as well as rights. If someone else use the trademark then you can also sue the party if the
trademark is registered.

7. Protection against infringement:

No competitor or other person can use the word mark or logo registered by you under trademark.
However, if in any case one uses it without the approval of the owner of trademark or make any
deceptive use of same, the owner can get the legal protection under the Act and stop the person
doing so.

8. Protection for 10 Years at low cost:

Online Trademark registration is done on a very low maintainability cost. Once you register the
trademark you have to just pay the maintenance cost and renewal cost which is after 10 years of
registering the trademark. It is cost efficient and helps your company create an unique image.

9. Global Trademark Registration:

If one wants to register the trademark in countries other than India, the trademark registered in
India can be used as basis of registration there. For any person willing to expand outside India,
the trademark registered in India can provide a good base along with the Established Goodwill in
the Country.

10. Attract Human Resources:

Young minds aspire to join big Brands as it acts as a magnate. It inspires the positive image of
the organisation and thus candidates are attracted towards them easily. This reduces the cost
towards hiring and related activities.

⮚ DISADVANTAGES OF THE TRADEMARK

1. Trademark registration

It is valid for a period of 10 years and wishes to renew after every 10 years. The most
disadvantage of trademark registration is that you simply need to pay fees in every 10 years so as
to take care of it. Non-payment of renewal fees may cause the removal of the trademark from the
register.

2. Weakest protection

In terms of providing the protection to the products or services, trademark registration is that the
weakest property rights amongst patents, copyright protection. Trademark doesn’t protect the
products always; it protects the just marketing concepts. Therefore, a trademark should go along
side another property rights being the weakest protection.

3. Descriptive trademark

There are many disadvantages of choosing a descriptive trademark. Generic and descriptive
trademarks aren’t qualifying for registration with the registrar. Usually, descriptive trademarks
are considered as weak marks because they are doing not acquire distinctiveness.

4. Cost

If you registered a descriptive trademark, you want to have a allow marketing and advertisement
also so as to create an association in customer’s mind with the trademark to accumulate the
distinctiveness.

COPYRIGHT

⮚ WHAT IS A COPYRIGHT?

In the simplest terms, copyright means the right to copy. Only the owner of the copyright,
usually the creator of the piece, is allowed to produce or reproduce the work in question or to
permit anyone else to do so. Copyright law rewards and protects creative endeavour by giving
the sole right to publish or use your work in any number of ways. You may also choose not to
publish or to prevent anyone else from doing so. By way of example, the business that creates
instruction manuals, descriptive literature, promotion material and price lists or develops
computer software has the right to prevent others from copying this creation.

Copyright applies to all original literary, dramatic, musical and artistic works. Each of these
general categories covers a wide range of creations. Few examples:

Literary Works - Books, pamphlets, product literature, instruction manuals, operation manuals,
poems and other works consisting of text, including computer programs;

Dramatic Works - Films, videos, plays, screenplays and scripts;

Musical Works - Compositions that consist of both words and music, or music only (note that
lyrics only fall into the literary works category);

Artistic Works - Paintings, drawings, maps, photographs, sculptures and architectural works.

⮚ BASICS OF COPYRIGHT

1. Requirements for copyright protection

To qualify for copyright protection work must be original

Originality relates to expression of thought and not to the underlying idea or thought

Essentially, originality refers to the fact that the work was independently created and it
was not copied from somewhere else.

2. Copyright Notice

It is not mandatory to put the notice on your work in view to be protected. But it is strongly
recommended to remind people that the work is copyrighted and identifies the copyright owner.

✔ A copyright notice general consists of

1. The word “copyright” or the copyright symbol “©”

2. The year in which the work was first published.

3. The name of the copyright owner; and

4.The words “All Rights Reserved”

 WHEN COPYRIGHT DOES NOT APPLY

Titles, names and short word combinations are usually not protected by copyright. A "work" for
copyright purposes must be something more substantial. However, if a title is original and
distinctive, it is protected as part of the work it relates to.

Copyright is restricted to the expression of an idea; it does not extend to the idea itself. You may
have a brilliant idea for an advertising campaign, but until the script is actually written, or the
advertisements purchased, there is no copyright protection. In the case of a game, it is not
possible to protect the idea of the game, that is, the way the game is played, but the language in
which the rules are written would be protected as a literary work.

Other items which are not protected by copyright include names or slogans; short phrases and
most titles, methods of procedure, such as a method of teaching or sculpting, etc.; plots,
characters, or factual information. In the case of a magazine article including factual information,
it is the expression of the information that is protected, and not the facts. Facts, ideas and news
are all considered part of the public domain, that is, they are the property of everyone. Note also
that you cannot hold a copyright for a work that is in the public domain. However, you can adapt
or translate such a work, and hold a copyright of an adaptation or translation.

The reporting of any event in which the public has a right to attend, unless the event is by
invitation only, is deemed to be in the public domain. Conversations that are established to be
confidential or off the record are the property of the giver of the material and not part of the
public domain.

Duration

Copyright usually exists for the life of the author, the remainder of the calendar year in which the
author dies, and for 50 years following the end of that calendar year. Therefore, protection will
expire on December 31st of the 50th year, after which the work becomes part of the public
domain and anyone can use it. For example, Shakespeare's plays are part of the public domain;
everyone has an equal right to produce or publish them.

However, there are certain exceptions to the general rule of the life of the author plus 50 years.
These are:

● Three types of works, i.e., photographs, certain cinematography, and sound recordings
where protection is based on the date of creation or publication, not the life of the author;
● Works of Crown copyright;
 ● Certain special rules relating to works which are normally protected for the life of the
author plus 50 years,

Photographs - The copyright exists for the remainder of the calendar year of the making of the
initial negative or Photo, or, where there was no negative or other plate, the making of the initial
photograph, and 50 years thereafter.

⮚ ADVANTAGES OF USING YOUR COPYRIGHT:

1) Generate income (selling, licensing)
2) Get financing – using copyright as a collateral
3) Build up an image/brand
4) Allow you to claim legal damages and attorney's fees for violation of your copyright.
5) Copyright gives the owner the exclusive right to many of the economic rights.

6) The right to production \ reproduction: - Copyright gives the creator part of the
intellectual property and the right to production and reproduction of his work.
7) The right to authorize: - These rights include the right to permit other production,
reproduction and the right of broadcasting your business.
8) Protection: - of course the copyright prevents your business from theft or misuse of
others.
9) The moral rights - the rights of copyright allows the owner of copyright in the object to
the uses of their work that they find morally objectionable.

⮚ DISADVANTAGES

1) Lack the ability to share the work: - copyright does not allow you to allow others to use or
distribute your work in public and this can slow your work is published or not published at all.
2) Copyright is not the ownership: - you must have the copyright to be able to exercise the
rights granted.

LICENSING

Licensing is an arrangement between two parties, where one party has proprietary rights
protected by a patent, trademark, or copyright. This requires the licensee to pay a royalty to
the holder of the proprietary rights in return for permission to copy the patent. Licensing
has significant value as a marketing strategy to holders of patents.

Procedure

A patent license agreement specifies how the licensee would have access to the patent.
Licensing a trademark usually involves an agreement where the entrepreneur operates a
business using the trademark and agrees to specific requirements. The agreement must be
carefully worded and should involve a lawyer. Licensing a trademark generally involves a
franchising agreement. The entrepreneur operates a business using the trademark and agrees to
pay a fixed sum for use of the trademark.

The franchisee also pays a royalty based on sales volume, buys supplies from the franchiser, or
some combination of these. Copyrights are also popular licensed property. They involve the
right to use or copy books, software, music, photos, and plays. Celebrities will often license
the right to use his or her name or image in a product. Hit movies can also result in new
products. Licensing is also popular around special sports events.

Licensing opportunities are plentiful but should be carefully considered and planned. A
significant player in licensing is Walt Disney, which has been actively engaged in licensing for
65 years. Licensing can be valuable for a firm that lacks resources to conduct R&D to develop a
product. Technology licensing entails an agreement by which a firm (licensee) acquires rights to
product technology from another firm (licensor.) Two reasons for licensing are to gain
competitive advantage and to improve technical skills.

Benefits:

1. Licensing can increase revenues, without the risk and costly start-up investment.
2. Licensing can also be a way to start a new venture when the idea may infringe.

⮚ PRODUCT SAFETY AND LIABILITY

The Consumer Product Safety Act, passed in 1972, created a five-member commission
that has the power to prescribe safety standards for products. The commission also has the
power to identify what it considers to be substantial hazards and bar products it considers
unsafe.
 The act was amended in 1990 to establish stricter guidelines for reporting product
defects and resulting injuries and deaths. Manufacturers could be subject to fines of $1.25
million for not reporting product liability settlements or court awards.

Any new product should be assessed as to whether it falls under the law. If it does, the
entrepreneur has to follow appropriate procedures.

Product liability problems are complex. Recent attempts to reform the legislation passed in
Congress but were vetoed by the President.

⮚ Claims regarding product safety and liability usually fall under one of these categories:

1. Negligence extends to all parts of the production and marketing process.

2. Warranty Consumers may sue when advertising overstates the benefits of a product or when
the product does not perform as stated.

3. Strict Liability. A consumer can sue on the basis that the product was defective prior to its
receipt.

4. Misrepresentation occurs when advertising or other information misrepresents material facts

concerning the quality of the product. The best protection against product liability is to produce
safe products and to warn consumers of any potential hazards.

⮚ INSURANCE

The entrepreneur should purchase insurance in the event that problems do occur. Most
firms should consider coverage in specific areas as a means of managing risk in the business.
Common types of insurance include:

1. Property insurance.

2. Casualty insurance.

3. Life insurance.

4. Worker’s compensation.

5. Bonding.

Each of these types of insurance provides a means of managing risk in the new business. Some
insurance, such as disability and vehicle coverage, is required by law and cannot be avoided. Life
insurance of key employees is not required but may be necessary to protect the venture.
 The entrepreneur should consider the increasing insurance premiums in cost projections. The
entrepreneur should determine what kind of insurance to purchase, how much to purchase, and
from what company.

Skyrocketing medical costs have significant impact on insurance premiums, especially

workers’ compensation. Insurance companies calculate the premium for workers’ compensation
as a percentage of payrolls, type of business, and prior claims. Some states are undertaking
reforms in this coverage.
 BUSINESS PLAN

⮚ Meaning:

In simple words, business plan is a written statement of what an entrepreneur proposes to take
up. It is a kind of guide frost or course of action what the entrepreneur hopes to achieve in his
business and how is he going to achieve it.

In other words, business plan serves like a kind of big road map to reach the destination
determined by the entrepreneur.

⮚ DEFINITION

Mar J. Dollinger has defined the business plan as “the formal written expression of the
entrepreneurial vision, describing the strategy and operations of the proposed venture.”

According to Jack M. Kaplan, “The term business plan means the development of a written
document that spells out like a roadmap where you are, where you want to be, and how you want
to get there.”

⮚ BUSINESS PLAN SHOULD CONTAIN THE FOLLOWING CONTENTS

1. General Information:

Information on product profile and product details.

2. Promoter:
His/her name, educational qualification, work experience, project related experience.

3. Location:
Exact location of the project, lease or freehold, locational advantages.

4. Land and Building:

Land area, construction area, type of construction, cost of construction, detailed plan and
estimate along with plant layout.

5. Plant and Machinery:

Details of machinery required, capacity, suppliers, cost, various alternatives available, cost of
miscellaneous assets.

6. Production Process:
Description of production process, process chart, technical knowhow, technology alternatives
available, production programme.

7. Utilities:

Water, power, steam, compressed air requirements, cost estimates, sources of utilities.

8. Transport and Communication:

Mode, possibility of getting, costs.

9. Raw Material:
List of raw material required by quality and quantity, sources of procurement, cost of raw
material, tie-up arrangements, if any, for procurement of raw material, alternative raw material, if
any.

10. Manpower:
Manpower requirement by skilled and semi-skilled, sources of manpower supply, cost of
procurement, requirement for training and its cost.

11. Products:
Product mix, estimated sales, distribution channels, competitions and their capacities, product
standard, input-output ratio, product substitute.

12. Market:
End-users of product, distribution of market as local, national, international, trade practices, sales
promotion devices, and proposed market research.

13. Requirement of Working Capital:

Working capital required, sources of working capital need for collateral security, nature and
extent of credit facilities offered and available.

14. Requirement of Funds:

Break-up of project cost in terms of costs of land, building, machinery, miscellaneous assets,
preliminary expenses, contingencies and margin money for working capital, arrangements for
meeting the cost of setting up of the project.

15. Cost of Production and Profitability of first ten years.

16. Break-Even Analysis

17. Schedule of Implementation

⮚ SCOPE AND VALUE OF BUSINESS PLAN

The preparation of a business plan or project report is of great significance for an

entrepreneur.

✔ The business plan serves the following essential functions:

✔ First and most important the business plan is like a road map. It describes the direction the
enterprise is going in, what its goals are, where it wants to be, and how it is going to get there.

✔ It also enables an entrepreneur to know that he is proceeding in the right direction. Some
hold the view that without well spelled out goals and operational methods/tactics, most
businesses flounder on the rocks of hard times.

✔ The next function of the business plan is to attract lenders and investors. Although, it is not
mandatory for the small enterprises to prepare business plans, yet it is useful and beneficial for
them to prepare the project reports for various reasons.

✔ The preparation of business plan is beneficial for those small enterprises which apply for
financial assistance from the financial institutions and the commercial banks.

✔ It is on the basis of business plan or project report that the financial institutions make appraisal
if the enterprise requires financial assistance or not.

⮚ What are the three main purposes of a business plan?

Before you write your business plan, it's important to understand the purpose of creating it in the
first place. There are three main reasons why you should have a business plan:

1. Establish a business focus.

The primary purpose of a business plan is to establish your plans for the future. These plans should
include goals or milestones alongside detailed steps of how the business will reach each step. The
process of creating a roadmap to your goals will help you determine your business focus and
pursue growth.

2. Secure funding.

One of the first things private investors, banks or other lenders look for before investing
in your business is a well-researched business plan. Investors want to know how you
operate your business, what your revenue and expense projections are and, most
importantly, how they will receive a return on their investment.

3. Attract executives. As your business grows, you'll likely need to add executives to your team.
A business plan helps you attract executive talent and determine whether or not they are a
good fit for your company.

.
⮚ WRITING A BUSINESS PLAN

Writing a business plan has to be carefully planned and systematically executed. Writing
business plan is especially useful for the entrepreneurs who require financial help from the
outside sources like banks and financial institutions.

✔ STEPS FOR WRITING THE BUSINESS PLAN/ HOW TO CREATE AND

IMPLEMENT A BUSINESS PLAN

1. Define Purpose:

The business plan will serve its purpose better if its purpose is spelt out in the very beginning.
There may be multiple goals in writing the business plan. For example, the entrepreneur may be
planning on using the business plan to secure bank finance as well as to attract a major
corporation as a strategic partner. It is okay to have multiple goals, but some amount of
customizing should be done before placing it in front of different audiences.

2. Collect Information:

All sorts of information about the business and the industry should be collected. List out all the
information you already have with you, figure out the major gaps in information, and go out
there to get more information. Do not rate the quality of this information; just gather it. At this
point, the more you can find the better.

3. Write Down Things:

After enough information has been gathered, you can plan on starting the actual writing. Think
of a rough structure appropriate for the business plan and start writing. It is important to note
down things on paper without being too particular about sequence and grammar. Approach it like
a brainstorming session. Do not be critical of your efforts. Just make sure that you are putting
enough thoughts on paper.

4. Prepare a Rough Draft:

Now it is time to give shape to your business plan and make it concrete. Correct grammatical
mistakes and break up the written account into meaningful sections. Compare your writing to
your intended outline and make necessary changes. As your work progresses, you will need to
make a note of what else needs to be added. For some topics, more information will be needed.
At this stage of the writing process, you are going to decide on the level of detail necessary to be
included in the business plan.

5. Do Financial Analysis:

The numbers will continue to be important. After all costs and revenue estimates have been
arrived at, pro-forma financial statements are to be drafted. That will lead to drawing up the
sensitivity analysis, the ROI calculation, the break-even analysis, and other financial rations. The
numbers should be realistic and consistent.

6. Finalize the Plan:

Finalizing the business plan is certainly a hard job. Language and spellings have to be checked,
the numbers have to be scrutinized and formatting has to be completed. Even small errors can
leave a very bad impression. The business plan should not be ornate but should have a
professional look about it. Set a deadline for completing it and adhere to the deadline. One good
way to enforce a deadline is to tell some people that you will be showing them the business plan
by a certain date. Now it will be hard for you to ignore the deadline.

7. Get the Plan Reviewed:

Do not review your business plan yourself. Ask someone else to do it. It could be a family
member, a friend, or a professional acquaintance. Even better would be if you could get a
number of people to do it. After getting comments on your plan, you should incorporate only
those suggestions that you find convincing.
⮚ SUCCESSION PLANNING AND STRATEGIES FOR HARVESTING AND ENDING
THE VENTURE

✔ SUCCESSION PLANNING

It is a strategy for passing on leadership roles—often the ownership of a company—to an

employee or group of employees. Also known as "replacement planning," it ensures that
businesses continue to run smoothly after a company's most important people move on to new
opportunities, retire, or pass away.

Succession planning can also provide a liquidity event enabling the transfer of ownership in a
going concern to rising employees.

✔ HOW SUCCESSION PLANNING WORKS

Succession planning evaluates each leader’s skills, identifying potential replacements both
within and outside the company and, in the case of internal replacements, training those
employees so that they’re prepared to take over. Succession planning is not a one-time event;
succession plans should be reevaluated and potentially updated each year or as changes in the
company dictate.

In addition, businesses might want to create both an emergency succession plan, in the event a
key leader needs to be replaced unexpectedly, and a long-term succession plan, for anticipated
changes in leadership.

✔ BENEFITS OF SUCCESSION PLANNING

There are several advantages for both employers and employees to having a formalized
succession plan in place:

● Employees know that there is a chance for advancement and possibly ownership, which can
lead to more empowerment and higher job satisfaction.
● Knowing that the company is planning for future opportunities reinforces career development
among employees.
● Management's commitment to succession planning means that supervisors will mentor
employees to transfer knowledge and expertise.
● Management keeps better track of the value of employees so that positions can be filled
internally when opportunities arise.
● With succession planning, leadership and employees are better able to share company values
and vision.

✔ STEPS FOR EFFECTIVE SUCCESSION PLANNING

1. Choosing and preparing successors to take over

Whether family or not, the keys to success are collaboration, openness, sharing of values and
beliefs, and communication between the founders and a new generation of owners.

2. Transferring my business

Although unique to every business, a business transition consists of a series of basic steps, such
as setting your financial goals, determining legal requirements and establishing your objectives.

3. Choosing an exit strategy

One of the most important step is knowing what exit options are available to you.
A business exit strategy is an entrepreneur's strategic plan to sell his or her ownership in a
company to investors or another company. An exit strategy gives a business owner a way to
reduce or liquidate his stake in a business and, if the business is successful, make a substantial
profit. If the business is not successful, an exit strategy (or "exit plan") enables
the entrepreneur to limit losses. An exit strategy may also be used by an investor such as
a venture capitalist in order to plan for a cash-out of an investment.

⮚ SUCCESSION PLANNING: 3 EXIT STRATEGIES FOR ENTREPRENEURS

1. Passing the business to a successor

In this case, the successor can be a family member or a manager in the company.
✔ Advantages:

● reduces third-party involvement

● gives you the possibility to maintain involvement and influence in business

✔ Disadvantages:

● it can be difficult to identify and train the right successor

● potential for conflicts at work and/or in the family

The first step when choosing this option is to establish the ideal profile for your successor. Then,
identify and evaluate potential candidates using fair, measurable criteria.

2. Transferring ownership through a management or employee buyout

Here, the management team or a group of employees pool resources to acquire all or a part of the
company. This is one of the best options for owners who don't have a candidate for succession or
who want to preserve the corporate culture of the business.

✔ Advantages:

● limited due diligence usually necessary

● rewards management for their long-term support for the business

● protects legacy and business independence

✔ Disadvantages:

● management often has limited access to capital and this could affect the price and the terms

● vendor take back likely (seller loans part of purchase price to buyers)

● failed purchase attempt can affect business morale and performance

3. Selling the business to a third party

There are several options for business owners who are looking to sell their small business.

● Initial Public Offering (IPO)—The sale and/or issuance of shares in a private company on
a public stock exchange.
● Private equity—The sale and/or issuance of shares to a financial investor.
● Sale to another business—The sale and/or issuance of shares to another operating company.
This is a good option for shareholders looking for a clean exit and the highest possible value.

Before making a final decision, make sure the type of transition you choose will be aligned with
your retirement choices. And don't forget to start planning early, at least two years before your
planned exit.
⮚ POSSIBLE EXIT STRATEGIES

1. Liquidation or Walkaway

There are times when a small business owner may decide that enough is enough, so he or she
simply calls it quits, closes the business doors, and calls it a day. for example, a small shop, a
restaurant, a small construction company, a shoe store, a gift shop, a consignment shop, a nail
salon, a bakery, or a video store

To make any money with the liquidation exit strategy, a business must have valuable assets to
sell—for example, land or expensive equipment. The name of the business may have some
value, so it could be purchased by someone for pennies on the dollar and restarted with different
owners. There is also a possibility that there may be a substantial amount of goodwill or even
badwill if a business has been around for a long time.

● pros
o It is easy and natural. Everything comes to an end.
o No negotiations are involved.
o There are no worries about the transfer of control.
● Cons
o Get real! It is a waste. At most, the owner will get the market value of the company’s
assets.
o Things such as client lists, the owner’s reputation, and business relationships may be very
valuable. Liquidation destroys them without an opportunity to recover their value.
o Other shareholders, if any, may be less than thrilled about how much is left on the table.
 o If a company’s brand has any value, there is a loyal or sizeable customer base, or there is
a stable core of employees, an owner would be significantly better off selling the company.

2. Family Succession

Many small business owners dream of passing the business to a family member. Keeping the
business in the family allows the owner’s legacy to live on, which is clearly an attractive option.
Family succession as an exit strategy also allows the owner an opportunity to groom the
successor; the owner might even retain some influence and involvement in the business if
desired.

Succession in family firms is a multistage, complex process that should begin even before the
heirs enter the business, and effects extend beyond the point in time when they are named as
successors. Many factors are involved, and the succession should evolve over a long period of
time.

3. Bankruptcy

Feeling the need to file for bankruptcy is a tough pill for any small business owner to
swallow. Bankruptcy is an extreme form of business termination that uses a legal method for
closing a business and paying off creditors when the business is failing and the debts are
substantially greater than the assets.

As bankruptcy is a complicated legal process, it is important to get an attorney involved as soon

as possible. There may be options other than bankruptcy, and consulting with an attorney will
help. The owner must understand how bankruptcy works and the options that are available. It is
also good to know that not all bankruptcies are voluntary; creditors can petition the court for a
business to declare bankruptcy.

✔ Alternatives to Bankruptcy

Instead of going the bankruptcy route, a small business owner could do the following
things:“Small Business Bankruptcy

● Negotiate debt. This involves trying to reorganize a business’s finances outside a legal
proceeding. The owner can work with the creditors to renegotiate the terms of payment and
the amount owed to each creditor. If a business is basically profitable but the debt situation is
 due to an unusual circumstance, such as a lawsuit or a temporary industry slowdown, this could
be a successful solution.
● Improve operations. If the owner is in a position to fix the cash problem by fixing the
underlying problems in the business, it may not be necessary to declare bankruptcy. An owner
should look at cash-flow controls; eliminate unprofitable products, services, and divisions; and
restructure into a leaner and meaner organization.
● Turn around and restructure the business. This alternative combines debt negotiation and
operational improvement—perhaps the best choice. By doing both things at the same time, an
owner will be in an even stronger position to improve the balance sheet, cash flow, and
profitability—and avoid insolvency.

4. Taking a Company Public

An initial public offering (IPO) is a stock offering in which the owner or owners of equity in a
formerly private company have their private holdings transferred into issues tradable in public
markets, such as the New York Stock Exchange

● Pros
o The owner will be on the cover of Newsweek.
o The stock will be worth in the tens—or even hundreds—of millions of dollars.
o Venture capitalists will finally stop bugging the owner as they frantically try to ensure
their shares will retain value.
● Cons
o Only a very few number of small businesses actually have this option available to them
because there are so few IPOs in the United States each year.
o A business needs financial and accounting rigor from day one that is way beyond what
many small business owners put in place.
o The owner will spend most of his or her time selling the company, not running it.
o Investment bankers take 6 percent off the top, and the transaction costs of an IPO can run
into the millions.
5. Selling the Business

Another possible exit strategy is selling the business. Although the sale of a business is
sometimes described as the end of entrepreneurship or as failure or defeat. Selling the business
can also be a relief and the beginning of the next phase of the owner’s personal and professional
life.

⮚ 8 REASONS WHY BUSINESS PLANS FAIL

1. Bad business ideas

Nobody likes to talk about it, but the main reason why business plans fail is bad ideas. Most
ideas look great on paper—but all too often, companies realize they have invested in a bad idea
once it is too late.

To avoid this, smart businesses are using “user-driven development” (UDD) to build new
businesses. Lots of ideas seem great until you figure out that the market doesn’t actually
want your product. In order to ensure that a business idea is sound, entrepreneurs should search
for product validation by reaching out to their target consumers before sinking huge amounts of
time and money into the project.

2. Employee compensation is not incentive compatible

Business plans can fail because employees are not compensated in a way that aligns the goal of
the employee with the goals of the company. In game theory, a contract is an incentive
compatible if “every participant can achieve the best outcome to him/herself just by acting
according to his/her true preferences”

3. No exit strategy for firing lazy co-founders

Anyone who has started a company knows that team conflicts are inevitable. A good business
plan should have a step-by-step procedure for handling internal disputes. First of all, each co-
founder should have a specific set of responsibilities with deadlines and consequences for failing
to meet those deadlines.

4. The team is not balanced

Another problem that I often notice on business plans is that the team is not balanced.

Company culture is an often underestimated challenge. I have read several business plans that
present a compelling argument for a new product; however, the majority of plans fail to put
together a team that has the competencies required to actually execute the business plan.
For example, tech business plan that was making a health application for smartphones.
However, the team did not have a single developer or IT specialist involved. If the business idea
requires 80 percent of the labor hours to be performed by a software programmer, then the team
needs at least one developer onboard. It is important to keep in mind that venture capitalists
sometimes refuse to fund companies that only have one founder or have unbalanced teams.

5. Detailed financial projections are missing

The majority of business plans that I have been asked to edit have conveniently left out the
balance sheet, cash flow statement, profit and loss statement, and income statement. The
“numbers” are actually the most interesting part of the entire document for most investors.
Break-even and return-on-investment (ROI) calculations are also parts of a good business plan.

Do not forget to factor in future expenses. For example, if the company needs to purchase new
office equipment every three years, then the discounted value of those expenses should be
included in the forecasted financial projections. Of course, the figures are only estimates, but
they are important benchmarks that can be used to measure the company’s progress toward
achieving their goals.

6. Spelling and grammar mistakes

If you want to be 100 percent certain that there are no spelling errors, then consider hiring a
professional editor to review your business plan.

Although some people think hiring a professional editor is “over the top,” the reality is that the
most competitive firms have a professional editor review all of their documents for accuracy. If a
bank or investor reads a business plan with typos, they will start to wonder if the entrepreneur is
competent enough to run a successful business.

7. False assumptions
One of the final mistakes that startups make is falsely assuming the values of their investors and
the values of their end-users, with some of the most common false assumptions being about their
political or religious affiliation. This can be game over for successful companies, so startups
should be especially careful.

Several examples exist of people that falsely assumed that their opinions were not controversial
or were held by the majority. For example, Matt Harrigan, CEO of the startup Packetsled,
stepped down after his comments about President Trump.

8. Failure to improve business plan after receiving feedback

Once you have finished writing your business plan, it is a good idea to send it out to at least three
people before showing it to potential investors.
Think of these three people as your board of advisors. Ask them to read the plan and look for
logical gaps in the content. If one advisor recommends a change that you disagree with, do not
ignore his advice. Instead, ask the other advisors for their opinions and then make a decision.
Edit your plan according to their constructive criticism, and thank them for their help.

⮚ REASONS FOR THE FAILURE OF ENTREPRENEURIAL VENTURES.

Failure is not something you will consider when starting a new business. But research also
suggests, the failure rate for new startups within five years of their business is near to 50 percent.
Most of the entrepreneurs follow all the golden rules of becoming successful. Nevertheless, there
are a lot of reasons and causes behind an entrepreneur’s failure, and today we will talk about the
top 10 factors forcing entrepreneurs to fail in 2018.

1. Lack of Vision
It is an assumption that loving something or having so much passionate about a thing is enough
reason to make it a business. But people don’t understand the broader picture, the most necessary
thing when starting a business is the vision. You have to realize that it is the starting point and
where you would like to see yourself after 2, 5 or 10 years. A clear vision will help you to focus
and can stop you from moving in a wrong direction.

2. Selection of a Business
Selection of business is eventually one of the top reasons why most entrepreneurs fail. One of the
tricky moments in an entrepreneur’s life comes when he or she decides which business to adapt.
Yes, every business has a potential of millions in it, but you have to understand that not every
business is appropriate for you. Doing proper research before selecting a business is essential.
Write down pros and cons of every business idea that comes to your mind and then go with the
most suitable one.

3. Lack of Proper Planning

Improper planning is another common reason why entrepreneurs fail and go out of the market. A
lot of first-time entrepreneurs often neglect that having a business plan is a very vital part of
starting a new business. The planning should include a long-term and a short-term strategy. Your
business vision will help you to set a goal but to achieve that goal a master plan is a key.

4. Not Having Enough Capital

Starting a business without sufficient capital is almost certainly a suicide. New entrepreneurs
often don’t realize the importance of cash flow or underestimate the value of money they will
need to run their startup smoothly. You may also take services of a financial advisory firm; they
will help you to predict how much money you’ll need to launch your business.

5. Poor Implementation of the Plan

A master plan is worth nothing without proper execution. There are many reasons behind the
failure of implementation, but the most critical reason is ineffective leadership. Implementation
of new strategies comes with enormous challenges; leaders must have the courage and
determination to overcome them with patience.

6. The Hiring of Wrong People

Hiring the right people is vital to the success of any entrepreneur. Hiring a wrong person is not
only a waste of resources, but it also creates a negative work environment which is not a good
sign for your company. Instead of regretting a lousy hire, take a wise move to replace it with a
right one.

7. Failure in Marketing
Marketing plays the vital role in the success of every business, and it is also among the most
significant factors in the failure of entrepreneurs in 2018. You can get many potential buyers for
the services or products you are offering with the marketing; it is a reliable process that can
significantly contribute to your business success.

8. Expanding Very Early

The expansion and growth are the primary goals of every entrepreneur, but an early evolution
can lead your business to death. You must decide about growth only after carefully reviewing
and analyzing all the aspects. Just keep in mind, after the expansion it will be much harder to
manage your business, and you must do it at an exact time.

9. Underestimating Competition
An important reason to mention for why entrepreneurs go out of business is underestimating the
competition. To take a valuable share of a market, you must understand your competitors and
think them as a severe threat. To increase your odds of success, keep a keen eye on your
competitor’s strengths and weaknesses.

10. Giving Up Very Early

The cause which is very common in the failure of every entrepreneur is that they give up and
shut down all the projects. It’s tough to encourage and pick you up in massive frustration, but
there is no magic pill to turn failure into success. It’s time to face the truth; the path of becoming
a successful entrepreneur is full of hurdles and roadblocks. Instead of giving up, learn from your
mistakes and try not to repeat them.