UNIT - I

ENTREPRENEURSHIP
Entrepreneurship is to a large degree a mind-set, always striving to do new things in an innovative
and better way. The meaning of entrepreneurship is derived from the French seventeenth-century term for
someone who “undertakes” and more specifically someone who undertakes a specific project or activity.
In the nineteenth century, the French economist Jean Baptiste Say refined the meaning of entrepreneurship
to individuals who create value by shifting resources from lower- to higher-valued activities. The higher
value activities can be activities that bring value to both individuals and society.
It is the twentieth-century thought on entrepreneurship from Joseph Schumpeter, an Austrian born
and then Harvard University–based economist and sociologist, which has most influenced contemporary
thinking about entrepreneurship. In Schumpeter’s view, entrepreneurs are innovators who drive the
“creative destruction” process, reforming or revolutionizing the pattern of production. In many respects,
sustainable businesses are significantly changing, if not revolutionizing, the patterns of production and
service delivery, transforming business practices in ways that benefit the environment and society.
What is Entrepreneurship?
Entrepreneurship is both the study of how new businesses are created as well as the actual process
of starting a new business – the term is used interchangeably. An entrepreneur is someone who has an idea
and who works to create a product or service that people will buy, by building an organization to support
those sales.
Entrepreneurship is now a popular college major, with a focus on studying new venture creation.
Start-ups
Starting a business generally requires:
 A business concept or idea involving a product, service, process, or new technology
 People to support the work, whether as employees, vendors, or advisors
 A process by which the product or service will be delivered, or the technology will be developed
 Enough money to support the development of the idea to the point that it generates revenue
 Why New Businesses are Started
According to research by Cox Business, the main reasons entrepreneurs go out on their own, rather than
staying employed, are:
 Control – to be their own boss
 Ambition – to start something from scratch themselves
 Financial – opportunity to earn more money
In fact, an Intelligent Office study reported that 65% of employees would rather be entrepreneurs than
work for someone else.
What Kind of Business to Start
Finding a need or opportunity in the market and filling it is at the core of entrepreneurship and small
business success. That doesn’t mean that starting a business similar to one already in existence can’t be
successful, however.
In considering what kind of business to start, assess:
 Your interests
 Your background and experiences
 Your financial resources
 Unmet market needs
 Problems you can solve
 Your network and connections

Importance And Role Of Entrepreneurship

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1. Wealth Creation and Sharing: By establishing the business entity, entrepreneurs invest their own
resources and attract capital (in the form of debt, equity, etc.) from investors, lenders and the public. This
mobilizes public wealth and allows people to benefit from the success of entrepreneurs and growing
businesses. This kind of pooled capital that results in wealth creation and distribution is one of the basic
imperatives and goals of economic development.
2. Create Jobs: Entrepreneurs are by nature and definition job creators, as opposed to job seekers. The
simple translation is that when you become an entrepreneur, there is one less job seeker in the economy,
and then you provide employment for multiple other job seekers. This kind of job creation by new and
existing businesses is again is one of the basic goals of economic development. This is why the Govt. of
India has launched initiatives such as StartupIndia to promote and support new startups, and also others
like the Make in India initiative to attract foreign companies and their FDI into the Indian economy. All
this in turn creates a lot of job opportunities, and is helping in augmenting our standards to a global level.
3. Balanced Regional Development: Entrepreneurs setting up new businesses and industrial units help
with regional development by locating in less developed and backward areas. The growth of industries
and business in these areas leads to infrastructure improvements like better roads and rail links, airports,
stable electricity and water supply, schools, hospitals, shopping malls and other public and private services
that would not otherwise be available.
Every new business that locates in a less developed area will create both direct and indirect jobs, helping
lift regional economies in many different ways. The combined spending by all the new employees of the
new businesses and the supporting jobs in other businesses adds to the local and regional economic output.
Both central and state governments promote this kind of regional development by providing registered
MSME businesses various benefits and concessions.
4. GDP and Per Capita Income: India’s MSME sector, comprised of 36 million units that provide
employment for more than 80 million people, now accounts for over 37% of the country’s GDP. Each new
addition to these 36 million units makes use of even more resources like land, labor and capital to develop
products and services that add to the national income, national product and per capita income of the
country. This growth in GDP and per capita income is again one of the essential goals of economic
development.
5. Standard of Living: Increase in the standard of living of people in a community is yet another key goal
of economic development. Entrepreneurs again play a key role in increasing the standard of living in a
community. They do this not just by creating jobs, but also by developing and adopting innovations that
lead to improvements in the quality of life of their employees, customers, and other stakeholders in the
community. For example, automation that reduces production costs and enables faster production will
make a business unit more productive, while also providing its customers with the same goods at lower
prices.
6. Exports: Any growing business will eventually want to get started with exports to expand their
business to foreign markets. This is an important ingredient of economic development since it provides
access to bigger markets, and leads to currency inflows and access to the latest cutting-edge technologies
and processes being used in more developed foreign markets. Another key benefit is that this expansion
that leads to more stable business revenue during economic downturns in the local economy.
7. Community Development: Economic development doesn’t always translate into community
development. Community development requires infrastructure for education and training, healthcare, and
other public services. For example, you need highly educated and skilled workers in a community to
attract new businesses. If there are educational institutions, technical training schools and internship
opportunities, that will help build the pool of educated and skilled workers.
A good example of how this kind of community development can be promoted is Azim Hashim
Premji, Chairman of Wipro Limited, who donated Rs. 27,514 crores for promoting education through the
Azim Premji Foundation. This foundation works with more than 350,000 schools in eight states across
India.
So, there is a very important role for entrepreneurs to spark economic development by starting new
businesses, creating jobs, and contributing to improvement in various key goals such as GDP, exports,
standard of living, skills development and community development.

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Characteristics of entrepreneurship

Twelve characteristics of successful entrepreneurs that I have identified in my work with them are:
Confidence
Confidence is a hallmark of the entrepreneur. Not all of us are born with confidence, but that does
not mean we are not capable of it.
Passionate about learning
Entrepreneurs are often autodidactic learners, which means that much of what they know they
learned outside of a formal classroom setting. Autodidactic learners seek out information, ask questions
and do personal reading and research to gain knowledge. They also are quick to learn from their own
mistakes, which mean they are less prone to repeating them.
Responsibility
Rather than viewing a problem as someone else’s responsibility, an entrepreneur owns it and
works to find a solution that will leave things in better shape then they were. However, an effective
entrepreneur also knows the difference between healthy responsibility and an inability to delegate.

Dedicated
Entrepreneurs dedicate themselves to their plans, visions, and dreams, and that tenacity of purpose
affects their whole business. One of the biggest reasons that companies fail is because they lose focus.
Regardless of the effort required, an entrepreneur brings a single-minded dedication to the task by being
committed to a positive outcome and ready and willing to do what is necessary.
Good communication
Entrepreneurs recognize that communication is the key to successful relationships with people.
Entrepreneurs work on their communication skills, whether written, spoken, or non-verbal through body
language. And, above all, the entrepreneur develops their ability to listen, because the best communicators
are also the best listeners
Team player
Team players know how to succeed by working in partnership with others.
Systems-oriented
Good systems repeatedly produce great results. Entrepreneurs look for system-based solutions
before searching for human resource solutions. This way a business is secure regardless of any future staff
changes.
Grateful
Entrepreneurs don’t take things for granted. This gives them the agility and flexibility to adapt to changes
and demands, while it also reminds them that wealth is not just about possessions, but about fulfilment.
Optimistic
A positive outlook is essential for an entrepreneur. Past shortcomings, failures, or disappointments
don’t become detrimental to future plans.
Gregarious
Because business is all about people, entrepreneurs tend to be socially outgoing. They get excited
about sharing ideas, products, and services, and that excitement is contagious to their employees, clients,
friends, and other people.
Leadership
Entrepreneurs not only lead themselves, but they are also skilled at leading others. They know the
importance of teamwork, and they understand the need to appreciate others, support them, and reward
them accordingly.
Unafraid of risk or success

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 Entrepreneurs are not immune to fear. But they prioritize their approach to life so that the fears of
failure, frustration, boredom, drudgery, and dissatisfaction, or even success, don’t become debilitating or
dictative.
10 characteristics of an entrepreneur are;
Entrepreneur is an agent.
Entrepreneur is a risk taker.
Entrepreneur is a profit maker.
Entrepreneur is an achievement motivator.
Entrepreneur is a capital provider.
Entrepreneur is the determinant of the nature of the business.
Entrepreneur is an innovator.
Entrepreneur is a reward receiver.
Entrepreneur is a challenge taker.
The characteristics that encompass the concept of the entrepreneur are discussed below:

Qualities for an entrepreneur

Successful business people have many traits in common with one another. They are confident and
optimistic. They are disciplined self starters. They are open to any new ideas which cross their path (Side
note: Rich20Something is a great book about this, it covers the mindset of millennial entrepreneurs). Here
are ten traits of the successful entrepreneur.
1. Disciplined

These individuals are focused on making their businesses work, and eliminate any hindrances or
distractions to their goals. They have overarching strategies and outline the tactics to accomplish them.
Successful entrepreneurs are disciplined enough to take steps every day toward the achievement of their
objectives.
2. Confidence

The entrepreneur does not ask questions about whether they can succeed or whether they are worthy of
success. They are confident with the knowledge that they will make their businesses succeed. They exude
that confidence in everything they do.
3. Open Minded

Entrepreneurs realize that every event and situation is a business opportunity. Ideas are constantly being
generated about workflows and efficiency, people skills and potential new businesses. They have the
ability to look at everything around them and focus it toward their goals.
4. Self Starter

Entrepreneurs know that if something needs to be done, they should start it themselves. They set the
parameters and make sure that projects follow that path. They are proactive, not waiting for someone to
give them permission.
5. Competitive

Many companies are formed because an entrepreneur knows that they can do a job better than another.
They need to win at the sports they play and need to win at the businesses that they create. An
entrepreneur will highlight their own company’s track record of success.
6. Creativity

One facet of creativity is being able to make connections between seemingly unrelated events or
situations. Entrepreneurs often come up with solutions which are the synthesis of other items. They will
repurpose products to market them to new industries.

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7. Determination

Entrepreneurs are not thwarted by their defeats. They look at defeat as an opportunity for success. They
are determined to make all of their endeavors succeed, so will try and try again until it does. Successful
entrepreneurs do not believe that something cannot be done.
8. Strong people skills

The entrepreneur has strong communication skills to sell the product and motivate employees. Most
successful entrepreneurs know how to motivate their employees so the business grows overall. They are
very good at highlighting the benefits of any situation and coaching others to their success.
9. Strong work ethic

The successful entrepreneur will often be the first person to arrive at the office and the last one to leave.
They will come in on their days off to make sure that an outcome meets their expectations. Their mind is
constantly on their work, whether they are in or out of the workplace.
10. Passion

Passion is the most important trait of the successful entrepreneur. They genuinely love their work. They
are willing to put in those extra hours to make the business succeed because there is a joy their business
gives which goes beyond the money. The successful entrepreneur will always be reading and researching
ways to make the business better.

Successful entrepreneurs want to see what the view is like at the top of the business mountain.
Once they see it, they want to go further. They know how to talk to their employees, and their businesses
soar as a result.

Functions of entrepreneur

Entrepreneurs are broadly classified into/our categories as mentioned below:

 Entrepreneurial Functions
 Managerial Functions
 Promotional Functions
 Commercial Functions
These are now discussed in seriatim:
1. Entrepreneurial Functions:
The major entrepreneurial functions include risk bearing, organizing, and innovation. Since these
are already discussed under the heading 1.2 Evolution of the Concept of Entrepreneur, the same is,
therefore, not discussed here again for the sake of repetition.
2. Managerial Functions:
The significance of management function lies in the fact that enterprises with excellent facilities
and quality resources have floundered and fizzled out due to either no management or poor management
and enterprises with good management but with poor facilities and resources have flourished and
performed exceedingly well. In small-scale enterprises, the entrepreneur who is the owner of the
enterprise also, has to perform the management functions as well.
The management functions performed by entrepreneur are classified into the following five types:
 Planning
 Organizing
 Staffing
 Directing
 Controlling

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1. Planning:
In common parlance, planning is pre-determined course of action to accomplish the set objectives.
In other words, planning is today’s projection for tomorrow’s activity. Planning pervades in all aspects of
business. An entrepreneur has to make decisions as to what is to be done, how it is to be done, when it is
to be done, where it is to be done, by whom it is to be done and so on.

The importance of planning lies in the fact that it ensures the smooth and effective completion and
running of a business enterprise. Absence of planning causes confusion which, in turn, affects the smooth
performance of job whatsoever it may be.
How? The following anecdote beautifully demonstrates it:
This is a story about four people named Everybody, Somebody, Anybody and Nobody. There was
an important job to be done. Everybody was sure that somebody would do it. Anybody could have done it,
but nobody did it. Somebody got angry about that because it was Everybody’s job. Everybody thought
anybody could do it, but nobody realized that everybody would not do it. It ended up that everybody
blamed somebody when nobody did what anybody could have done.
2. Organising:
The organizing function of an entrepreneur refers to bringing together the men, material, machine,
money, etc. to execute the plans. The entrepreneur assembles and organizes the above mentioned different
organs of an enterprise in such a way that these combinedly start functioning as one, i.e., enterprise. Thus,
organizing function of an entrepreneur ultimately provides a mechanism for purposive, integrated and co-
operative action by many people in a joint and organized effort to implement a business plan.
3. Staffing:
Staffing involves human resource planning and human resource management. Thus, staffing
function of an entrepreneur includes preparing inventory of personnel available, requirement of personnel,
sources of manpower recruitment, their selection, remuneration, training and development and periodic
appraisal of personnel working in the enterprise.
Business history is replete with evidences that it is basically the staff, i.e., personnel working in the
organization that makes all the difference. While appreciating the role of personnel in the success of an
organization, L. F. Urwick had remarked that, “business houses are made or broken in the long-run not by
markets or capital, patents or equipments, but by men.”
Andrew Carniege’s view that “Take my people and leave my factory, soon grass will grow on the
floor. Take my factory and leave my people, soon we shall build a better factory” also underlines the
significance of people or staffing in the making of an organization. However, staffing function is as
crucial for the success of a business enterprise is equally complex as well.
4. Directing:
The functions like planning, organizing, and staffing are merely preparations for setting up a
business enterprise. The directing function of entrepreneur actually starts the setting up of enterprise.
Under the directing function, the entrepreneur guides, counsels, teaches, stimulates and activates his/ her
employees to work efficiently to accomplish the set objectives.
Thus, directing function of entrepreneur concerns the total manner in which an entrepreneur
influences the actions of his / her employees/ workers. It is the final action of an entrepreneur in making
his / her employees actually act after all preparations have been completed.
5. Controlling:
Controlling is the last management function performed by the entrepreneur. In simple words,
controlling means to see whether the activities have been performed in conformity with the plans or not.
Thus, controlling is comparison of actual performance with the target or standard performance and
identification of variation between the two, if any, and taking corrective measures so that the target is
accomplished.
3. Promotional Functions:
1. Identification and Selection of Business Idea:
Every intending entrepreneur wants to start the most profitable and rewarding project. The
selection of the most suitable business project involves a process. The intending entrepreneur, based on his

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/her knowledge, experience, and information gathered from friends and relatives, generates some possible
business ideas which can be examined and pursued as a business enterprise.
This process is also described as ‘opportunity scanning and identification’. Then, the generated
ideas are analysed in terms of costs and benefits associated with them. Having made cost-benefit analysis
of all the ideas, the most beneficial idea is finally selected to be pursued as business enterprise.
2. Preparation of Business Plan or Project Report:
The entrepreneur prepares a statement called ‘business plan’ or ‘project report’ of what he / she
proposes to take up. In other words, business plan is a well evolved course of action devised by
entrepreneur to achieve the specified objectives within a specified period of time.
In this sense, business plan is just like an operating document. The preparation of business plan is
not must, but it is very much useful for the entrepreneur to establish his / her enterprise in an effective and
smooth manner. But, it is must for those entrepreneurs who intend to apply for financial assistance from
the financial institutions and banks for their enterprises.
It contains information about the intending entrepreneur, location of enterprise, requirement for
land and building, plant and machinery, raw material, utilities, transport and communication, manpower,
requirement for funds including working capital along with its sources of supply, break-even point and
implementation schedule of the project.
3. Requirement for Finance:
The entrepreneur prepares requirement for funds with its detailed structure. The financial
requirement is also classified into short-term and long-term separately. Then, the sources of supply to
acquire the required fund are also mentioned. How much will be the share capital in terms of equity and
preference shares and how much will be borrowed capital from different financial institutions and banks
are clearly determined.
4. Commercial Functions:
1. Production / Manufacturing:
Once the enterprise is finally established, it starts producing goods or offering services, whichever
be the case. Production function includes decisions relating to the selection of factory site, design and
layout, types of products to be produced, research and development, and design of the product.
The ancillary activities include production planning and control, maintenance and repair,
purchasing, store-keeping, and material handling. The effective performance of production function, to a
large extent, depends on the proper production planning and control.
2. Marketing:
All production is basically meant for marketing. Marketing is the performance of those business
activities that direct the flow of goods and services from producer to consumer or user. Thus, marketing
essentially begins and ends with the customers. It is important to note that marketing is not just selling. In
fact, marketing includes much more than selling. Selling is the last function in marketing activities.
The examples of marketing activities are market or consumer research, product planning and
development, standardization, packaging, pricing, storage, promotional activities, distribution channel, etc.
The success of marketing function is linked with an appropriate ‘marketing mix’. Traditionally, marketing
mix referred to 4 Ps, namely, product, price, promotion, and physical distribution. Of late, 3 more Ps
namely, packaging, people, and process are also added to ‘marketing mix’.
3. Accounting:
The main objective of any business enterprise is to earn profits and create wealth. Whether the
business is fulfilling its objective or not is ascertained through accounting. What is accounting? According
to the American Institute of Certified Public Accountants, “Accounting is the art of recording, classifying
and summarizing in a significant manner and, in terms of money, transactions and events which are, in
part at least, of a financial character and interpreting the results thereof.”
Thus, accounting involves a process consisting of the following four stages:
 Recording the Transactions
 Classifying the Transactions
 Summarising the Transactions
 Preparing the Final Accounts
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 Analysing and Interpreting the Results.
The Profit & Loss Account is prepared for ascertaining whether the business earned profit or incurred
loss during a particular period of time also called ‘accounting year’. The Balance Sheet is prepared to
know the financial position of business during the accounting period. Hence, the Balance Sheet is also
called ‘Position Statement.’

Theories of entrepreneurship
An entrepreneur puts together a business and accepts the associated risk to make a profit. While
this definition serves as a simple but accurate description of entrepreneurs, it fails to explain the
phenomena of entrepreneurship itself. A number of theories exist, but all of them fall into one of five main
categories

Economic Theories
Economic entrepreneurship theories date back to the first half of the 1700s with the work of
Richard Cantillon, who introduced the idea of entrepreneurs as risk takers. The classic, neoclassical and
Austrian Market process schools of thought all pose explanations for entrepreneurship that focus, for the
most part, on economic conditions and the opportunities they create. Economic theories of
entrepreneurship tend to receive significant criticism for failing to recognize the dynamic, open nature of
market systems, ignoring the unique nature of entrepreneurial activity and downplaying the diverse
contexts in which entrepreneurship occurs.

Resource-Based Theories
Resource-based theories focus on the way individuals leverage different types of resources to get
entrepreneurial efforts off the ground. Access to capital improves the chances of getting a new venture off
the ground, but entrepreneurs often start ventures with little ready capital. Other types of resources
entrepreneurs might leverage include social networks and the information they provide, as well as human
resources, such as education. In some cases, the intangible elements of leadership the entrepreneur adds to
the mix operate as resource that a business cannot replace.

Psychological Theories
Psychological theories of entrepreneurship focus on the individual and the mental or emotional
elements that drive entrepreneurial individuals. A theory put forward by psychologist David McCLelland,
a Harvard emeritus professor, offers that entrepreneurs possess a need for achievement that drives their
activity. Julian Rotter, professor emeritus at the University of Connecticut, put forward a locus of control
theory. Rotter’s theory holds that people with a strong internal locus of control believe their actions can
influence the external world and research suggests most entrepreneurs possess trait. A final approach,
though unsupported by research, suggests personality traits ranging from creativity and resilience to
optimism drive entrepreneurial behavior.

Sociological/Anthropological Theories
The sociological theory centers its explanation for entrepreneurship on the various social contexts
that enable the opportunities entrepreneurs leverage. Paul D. Reynolds, a George Washington University
research professor, singles out four such contexts: social networks, a desire for a meaningful life, ethnic
identification and social-political environment factors. The anthropological model approaches the question
of entrepreneurship by placing it within the context of culture and examining how cultural forces, such as
social attitudes, shape both the perception of entrepreneurship and the behaviors of entrepreneurs.

Opportunity-Based Theory
Prolific business management author, professor and corporate consultant, Peter Drucker put
forward an opportunity-based theory. Drucker contends that entrepreneurs excel at seeing and taking
advantage of possibilities created by social, technological and cultural changes. For example, where a

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business that caters to senior citizens might view a sudden influx of younger residents to a neighborhood
as a potential death stroke, an entrepreneur might see it as a chance to open a new club.

Stimulants of entrepreneurship and Barriers to entrepreneurship

Role of Entrepreneurs in Economic Development

1. Employment opportunities
Entrepreneurs employ labour for managing their business activities and provides employment
opportunities to a large number of people. They remove unemployment problem.

2. Balanced Regional Development

Government promotes decentralized development of industries as most of the incentives are granted for
establishing industries in backward and rural areas. Thus, the entrepreneurs to avail the benefits establish
industries in backward and rural areas.

They remove regional disparities and bring balanced regional development. They also help to reduce the
problems of congestion, slums, sanitation and pollution in cities by providing employment and income to
people living in rural areas. They help in improving the standard of living of the people residing in
suburban and rural areas.

3. Mobilization Of Local Resources

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Entrepreneurs help to mobilize and utilize local resources like small savings and talents of relatives and
friends, which might otherwise remain idle and unutilized. Thus they help in effective utilization of
resources.

4. Optimization Of Capital
Entrepreneurs aim to get quick return on investment. They act as a stabilizing force by providing high
output capital ratio as well as high employment capital ratio.

5. Promotion of Exports
Entrepreneurs reduce the pressure on the country’s balance of payments by exporting their goods they
earn valuable foreign exchange through exports.

6. Consumer Demands
Entrepreneurs produce a wide range of products required by consumers. They meet the demand of the
consumers without creating a shortage for goods.

7. Social Advantage
Entrepreneurs help in the development of the society by providing employment to people and paves for
independent living They encourage democracy and self-governance. They are adept in distributing
national income in more efficient and equitable manner among the various participants of the society.

8. Increase per capita income

Entrepreneurs help to increase the per capita income of the country in various ways and facilitate
development of backward areas and weaker sections of the society.

9. Capital formation
A country can attain economic development only when there is more amount of investment and
production. Entrepreneurs help in channelizing their savings and savings of the public to productive
resources by establishing enterprises. They promote capital formation by channelizing the savings of
public to productive resources.

10. Growth of capital market

Entrepreneurs raises money for running their business through shares and debentures. Trading of shares
and debentures by the public with the help of financial services sector leads to capital market growth.

11. Growth of infrastructure

The infrastructure development of any country determines the economic development of a country,
Entrepreneurs by establishing their enterprises in rural and backward areas influence the government to
develop the infrastructure of those areas.

12. Development of Trader

Entrepreneurs play an important role in the promotion of domestic trade and foreign trade. They avail
assistance from various financial institutions in the form of cash credit, trade credit, overdraft, short term
loans, secured loans and unsecured loans and lead to the development of the trade in the country.

13. Economic Integration

Entrepreneur reduces the concentration of power in a few hands by creating employment opportunities
and through equitable distribution of income. Entrepreneurs promote economic integration in the country
by adopting certain economic policies and laws framed by the government. They help in removing the
disparity between the rich and the poor by adopting the rules and regulation framed by the government for
the effective functioning of business in the country.

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 UNIT - II
Importance of Women Entrepreneurship
Women in the present day have been recognized as an indivisible part of the global struggle for a
stable economy. Same is the case in India where women have recently become the symbol of change.
Reasons that motivate women’s entry in commerce vary but despite all of their variations in
socioeconomic backgrounds, they have proved their worth time and again. They have taken risks in
businesses and managed to make them pay off. Over and over, Indian women have competed with men
and proven to be equal in every race, including entrepreneurship.
Women Entrepreneurs in India
Indian Government defines woman owned business as an entity where a woman or a group of
women owns at least “51% of the capital” and give 51% of generated employment to women. Women are
48% of Indian population but their participation is still below par as only 34% of Indian women are
engaged in financial and economic activities, many of which are unpaid or underpaid workers. With
gender-bias problems in some regions of India, women have also become victims of unemployment.
This bias has proven to be advantageous to certain extent as women have taken up
entrepreneurship to fill the void and prove their critics wrong.
Significance of Women in India’s Entrepreneurial Sector
Indian women have been at the receiving end of criticism but much to the dismay of their skeptics, they
have mostly appeared triumphant as the dust of criticism settled. The industry has much to gain and
literally nothing to lose with women in business. The merits are innumerable.

• Indian industry’s think-tank gets bigger.

• New opportunities are created.
• More employment opportunities are generated.
• Per-capita income increases.
• Indians enjoy better standard of living.
• Education and awareness becomes common.
• Future becomes brighter for the next generation.
• Women gain a better understanding of managing family and business concurrently.
• Indian women achieve a sense of self-realization and self-fulfillment.
• Women gain better ability to take risks and business decisions.
• Women become more confident.
Opportunities to Indian Women Entrepreneurs
Educated, gifted, and qualified females can enter virtually any business. Successful women have been
representing and still continue to represent brands like Times of India, PepsiCo, ICICI, TAFE, HP, HSBC
and J.P Morgan along with other names. The list in the lines to come puts forward few sectors where
women entrepreneurs of India can excel as senior managers and owners.
• Eco-friendly/ Bio-friendly sectors
• IT sector
• Event Management
• Lifestyle sector
• Beauty and cosmetic
• Healthcare
• Travel and tourism sector
• Food, food processing and beverages
• Telecommunications
• Financing
• Plastic manufacturing
• Local and international trading
• Property and estate

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Barriers to Indian Women Entrepreneurs of India
But like mentioned before, countless hurdles have been laid for Indian women over the years.
Surpassing all of these hurdles successfully is still a challenge. These are some of the problems women
face after starting their business:
 Family problems
 Management of Finance
 Managing manpower
 Professional disrespect

The key reason of women being blocked from business is that they are women. Male prejudice is
still prevalent in India. Male is still considered the dominant gender and sole bread provider. The view that
Indian women lack self-confidence, willpower, mental composure and entrepreneurial attitude has made
devastating effects on India. This view has kept the women from becoming leaders and has also instilled
fear in women.

This age-old prejudice has also convinced a portion of women that they are unable to take
risks; that they are unable to access technology, deal effectively with workers and that the best job for
them is to raise a family.
However, India is full of examples new and old that a woman can be an entrepreneur and a
successful one at that. Compared to men, fewer female businesses fail because of poor financial
management once their business gets a kick start.

Solutions to Barriers
The problems women face pose a challenge for government and the authorities to tackle, but with
the right approach and some time, they can be solved. Every Indian must understand the importance of
women entrepreneurship. On top of all, women need motivation and any discouragement must be dealt
with. Following are some measures that can be taken to make women empowered so that they can
continue their business activities as confidently as Indian men.
• Creating better education opportunities.
• Making provisions for personality development and training.
• Improving communication skills.
• Institutions where women can learn entrepreneurial skills and risk taking abilities.
• Measures to change the attitude of society concerning women and women
entrepreneurs in India.
• Attempts from nongovernmental bodies like agencies, trusts, welfare societies
• More women’s associations for better financing and capital management.
• Providing nationwide platform for women like forums to discuss prevalent issues
and solutions to deal with such shortcomings.

.
REASONS FOR WOMEN BECOMING ENTREPRENEURS
The following are the reasons for women becoming entrepreneurs,
 Innovative thinking
 New challenges and opportunities for self fulfillment
 Employment generation
 Freedom to take own decision and be independent
 Need for additional income
 Bright future
 Success stories of friends and relatives
 Role model to others who support family
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  Education and qualification self identity and social status
 They want to prove their personalities in innovative, daring and competitive jobs
 Introduction of attractive incentives, subsidies & various schemes by Government
 Increasing standard of living
 Increasing socio-economic awareness

PROBLEMS FACED BY WOMEN ENTREPRENEURS IN ENTERPRISE

They are the facing problems from the family. It is not an easy work to obtain the loan or finance
from the bank or financial institutions. If they get the finance they do not know how to manage it. They
find it hard to handle the manpower and materials. They do not have that technical training needed for the
venture. However, it may be hard to pick up their skills without training. As a women entrepreneur she
may not be posted with update information and she may lack exposure to the external trends in
industry. They should improve themselves by learning from their role models. Women Entrepreneurship
in India earlier there were 3 Ks: Kitchen, Kids & Knitting, then came 3 Ps: Powder, Pappad &Pickles, at
present there are 4 Es: Electricity, Electronics, Energy and Engineering.

THE MAJOR BARRIERS ENCOUNTERED BY WOMEN ENTREPRENEURS

The greatest deterrent to women entrepreneurs is that they are women.

 Lack of self-confidence, will-power, strong mental outlook and optimistic attitude amongst women
create a fear from committing mistakes while doing their piece of work.
 The old and outdated social outlook to stop women from entering the field of entrepreneurship is one
of the reasons for their failure.
 Women's family obligations also bar them from becoming successful entrepreneurs in both developed
and developing nations.
 Indian women give more emphasis to family ties and relationships.
 Achievement motivation of the women folk found less compared to male members.
 Absence of proper support, cooperation and back-up for women by their own family members and the
outside world people force them to drop the idea of excelling in the enterprise field.
 Credit discrimination and Non Cooperative officials
 Poor infrastructure and Dealing with male labourers
 Fear of expansion and Lack of access to technology
Problems Faced by Women Entrepreneurs in India
1. Problem of Finance:
Finance is regarded as “life-blood” for any enterprise, be it big or small. However, women
entrepreneurs suffer from shortage of finance on two counts.

Firstly, women do not generally have property on their names to use them as collateral for
obtaining funds from external sources. Thus, their access to the external sources of funds is limited.

Secondly, the banks also consider women less credit-worthy and discourage women borrowers on
the belief that they can at any time leave their business. Given such situation, women entrepreneurs are
bound to rely on their own savings, if any and loans from friends and relatives who are expectedly meager
and negligible. Thus, women enterprises fail due to the shortage of finance.

2. Scarcity of Raw Material:

Most of the women enterprises are plagued by the scarcity of raw material and necessary inputs. Added to
this are the high prices of raw material, on the one hand, and getting raw material at the minimum of
discount, on the other. The failure of many women co-operatives in 1971 engaged in basket-making is an

13
example how the scarcity of raw material sounds the death-knell of enterprises run by women (Gupta and
Srinivasan 2009).

3. Stiff Competition:
Women entrepreneurs do not have organizational set-up to pump in a lot of money for canvassing
and advertisement. Thus, they have to face a stiff competition for marketing their products with both
organized sector and their male counterparts. Such a competition ultimately results in the liquidation of
women enterprises.

4. Limited Mobility:
Unlike men, women mobility in India is highly limited due to various reasons. A single woman asking for
room is still looked upon suspicion. Cumbersome exercise involved in starting an enterprise coupled with
the officials humiliating attitude towards women compels them to give up idea of starting an enterprise.

5. Family Ties:
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.

6. Lack of Education:
In India, around three-fifths (60%) of women are still illiterate. Illiteracy is the root cause of socio-
economic problems. Due to the lack of education and that too qualitative education, women are not aware
of business, technology and market knowledge. Also, lack of education causes low achievement
motivation among women. Thus, lack of education creates one type or other problems for women in the
setting up and running of business enterprises.

7. 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.

8. Low Risk-Bearing Ability:

Women in India lead a protected life. They are less educated and economically not self-dependent.
All these reduce their ability to bear risk involved in running an enterprise. Risk-bearing is an essential
requisite of a successful entrepreneur.

In addition to above problems, inadequate infrastructural facilities, shortage of power, high cost of
production, social attitude, low need for achievement and socioeconomic constraints also hold the women
back from entering into business.

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Women Entrepreneurs: Concept and Functions of Women Entrepreneurs!
Concept:
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.”
The Government of India has defined women entrepreneurs based on women participation in
equity and employment of a business enterprise. Accordingly, the Government of India (GOI2006) has
defined women entrepreneur as “an enterprise owned and controlled by a women having a minimum
financial interest of 51 per cent of the capital and giving at least 51 per cent of the employment generated
in the enterprise to women.” However, this definition is subject to criticism mainly on the condition of
employing more than 50 per cent women workers in the enterprises owned and run by the women.
In nutshell, women entrepreneurs are those women who think of a business enterprise, initiate it, organize
and combine the factors of production, operate the enterprise and undertake risks and handle economic
uncertainty involved in running a business enterprise.
Functions of Women Entrepreneurs:
As an entrepreneur, a woman entrepreneur has also to perform all the functions involved in establishing an
enterprise. These include idea generation and screening, determination of objectives, project preparation,
product analysis, and determination of forms of business organization, completion of promotional
formalities, raising funds, procuring men, machine and materials, and operation of business.

Frederick Harbison (1956) has enumerated the following five functions of a woman entrepreneur:
 Exploration of the prospects of starting a new business enterprise.
 Undertaking of risks and the handling of economic uncertainties involved in business.
 Introduction of innovations or imitation of innovations.
 Coordination, administration and control.
 Supervision and leadership.
 The fact remains that, like the definition of the term ‘entrepreneur’, different scholars have identified
different sets of functions performed by an entrepreneur whether man or women.
All these entrepreneurial functions can be classified broadly into three categories:
 Risk-bearing
 Organisation
 Innovations

1. Creating New Venture

Women entrepreneurs identify the opportunities, evaluate them and select the best opportunity. They
convert the opportunity into new venture. Women entrepreneurs are imaginative in nature and they can
develop ideas about the new venture.

2. Risk Bearing
Every business includes some portion of risk. But women entrepreneurs have risk taking capacity. They
calculate different types of risks such as financial risk, social risk, psychological risk etc. They handle
risks by gathering information.

3. Innovation
This is another major function of women entrepreneurs. They convert their ideas into innovations to meet
market demands by the help of research and development facilities.

15
4. Management
Women entrepreneurs believe in hard work. They directly engage in the management. They take part in
planning, coordinating and controlling. They motivate and provide leadership to the employees.

What are the essential Entrepreneurial functions of women Entrepreneurs?

Like a male entrepreneur, a woman entrepreneur has to perform the following function:
1. Innovation:
Innovation is the basis function of woman entrepreneur. She has to introduce new product, creation of new
markets, application of new process of production, discovery of new and better sources of raw materials
and developing a new and better form of industrial organization.
2. Risk taking:
It is the fundamental function of a woman entrepreneur. It refers to take the responsibility for loss that
may occur due to unforeseen contingencies of the future.
A woman entrepreneur visualizes opportunities for introducing new ideas and handles economic
uncertainty. She is a self confident and highly optimistic lady willing to assume the risk involved in
innovations, new ventures and expansion of an existing venture.
3. Organization building:
Organization and management of the enterprise is the main function of a woman entrepreneur. It refers to
bring together the various factors of production. She alone decides the lines of business to expand and
capita to employ.

Step Taken By Government to Develop Women Entrepreneurs in India

The growth and development of women entrepreneurs required to be accelerated because
entrepreneurial development is not possible without the participation of women.
Therefore, a congenial environment is needed to be created to enable women to participate actively
in the entrepreneurial activities. There is a need of Government, non-Government, promotional and
regulatory agencies to come forward and play the supportive role in promoting the women entrepreneur in
India.

The Government of India has also formulated various training and development cum employment
generations programs for the women to start their ventures. These programmes are as follows:
1. Steps taken in Seventh Five-Year Plan:

In the seventh five-year plan, a special chapter on the “Integration of women in development” was
introduced by Government with following suggestion:

(i) Specific target group:

It was suggested to treat women as a specific target groups in all major development programs of the
country.
(ii) Arranging training facilities:

It is also suggested in the chapter to devise and diversify vocational training facilities for women to suit
their changing needs and skills.

(iii) Developing new equipments:

Efforts should be made to increase their efficiency and productivity through appropriate technologies,
equipments and practices.
(iv) Marketing assistance:

16
It was suggested to provide the required assistance for marketing the products produced by women
entrepreneurs.

(v) Decision-making process:

It was also suggested to involve the women in decision-making process.

2. Steps taken by Government during Eight Five-Year Plan:

The Government of India devised special programs to increases employment and income-generating
activities for women in rural areas. The following plans are lunched during the Eight-Five Year Plan:

(i) Prime Minister Rojgar Yojana and EDPs were introduced to develop entrepreneurial qualities among
rural women.

(ii) ‘Women in agriculture’ scheme was introduced to train women farmers having small and marginal
holdings in agriculture and allied activities.

(iii) To generate more employment opportunities for women KVIC took special measures in remote areas.

(iv) Women co-operatives schemes were formed to help women in agro-based industries like dairy
farming, poultry, animal husbandry, horticulture etc. with full financial support from the Government.

(v) Several other schemes like integrated Rural Development Programs (IRDP), Training of Rural youth
for Self employment (TRYSEM) etc. were started to alleviated poverty.30-40% reservation is provided to
women under these schemes.

3. Steps taken by Government during Ninth Five-Year Plan:

Economic development and growth is not achieved fully without the development of women
entrepreneurs. The Government of India has introduced the following schemes for promoting women
entrepreneurship because the future of small scale industries depends upon the women-entrepreneurs:

(a) Trade Related Entrepreneurship Assistance and Development (TREAD) scheme was lunched by
Ministry of Small Industries to develop women entrepreneurs in rural, semi-urban and urban areas by
developing entrepreneurial qualities.

(b) Women Comkp0onent Plant, a special strategy adop0ted by Government to provide assistance to
women entrepreneurs.

(c) Swarna Jayanti Gram Swarozgar Yojana and Swaran Jayanti Sekhari Rozgar Yojana were introduced
by government to provide reservations for women and encouraging them to start their ventures.

(d) New schemes named Women Development Corporations were introduced by government to help
women entrepreneurs in arranging credit and marketing facilities.

(e) State Industrial and Development Bank of India (SIDBI) has introduced following schemes to assist
the women entrepreneurs. These schemes are:
(i) Mahila Udyam Nidhi
(ii) Micro Cordite Scheme for Women
(iii) Mahila Vikas Nidhi
(iv) Women Entrepreneurial Development Programmes

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(v) Marketing Development Fund for Women

4. Consortium of Women entrepreneurs of India provides a platform to assist the women entrepreneurs to
develop new, creative and innovative techniques of production, finance and marketing.

There are different bodies such as NGOs, voluntary organizations, Self-help groups, institutions and
individual enterprises from rural and urban areas which collectively help the women entrepreneurs in their
activities.

5. Training programmes:

The following training schemes specially for the self employment of women are introduced by
government:

(i) Support for Training and Employment Programme of Women (STEP).

(ii) Development of Women and Children in Rural Areas (DWCRA).
(iii) Small Industry Service Institutes (SISIs)
(iv) State Financial Corporations
(v) National Small Industries Corporations
(vi) District Industrial Centres (DICs)

6. Mahila Vikas Nidhi:

SIDBI has developed this fund for the entrepreneurial development of women especially in rural areas.
Under Mahila Vikas Nidhi grants loan to women are given to start their venture in the field like spinning,
weaving, knitting, embroidery products, block printing, handlooms handicrafts, bamboo products etc.

7. Rashtriya Mahila Kosh:

In 1993, Rashtriya Mahila Kosh was set up to grant micro credit to pore women at reasonable rates of
interest with very low transaction costs and simple procedures.

UNIT - III
Entrpreneurial Opportunities available for Small Entrepreneurs in India
While thinking about business opportunities, I am reminded of the statement of Douglas
MacArthur given as opening quotation: “There is no security on this earth – only opportunity.” Regarding
the availability of (business) opportunities, the views of Thomas J. Watson also seem quite worth citing:
“Opportunity never knocks on the door. You have to knock on opportunity’s door and they are all
around.”

The various business opportunities, for example, available in the environment include but are not
confined to the following only:
1. Tourism:
By now, tourism has emerged as number one largest smokeless and fast growing industry in the
world due to its ample promises and prospects. Presently, it accounts for 8% of the world trade and around
20 % of service sector in the world.
Evidences indicate that many countries have progressed from backward to developing to
developed, mainly due to tourism development. For example, tourism industry contributes to more than
70% of the national income of some of the countries like Malaysia and Singapore. However, its share to
the national income of India is still dismally low at 2.5%.

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 Though India shelters around 15 % of the world population with its 2.5% of the world territory, it
accounts for only 0.40 % in the world tourism market. However, the prognostic picture of the Indian
tourism is not because of lack of tourism potential, but because of unleashing of the ample tourism
potential she is endowed with.
2. Automobile:
India has made much headway in automobile industry and by now has emerges as a hot spot for
automobiles and auto-components. A cost- effective hub for auto components sourcing for global auto
makers, the automobile sector is by all indications a potential sector for entrepreneurs in India.
This is confirmed by a record increase registered by automobile industry in India. The automobile
industry recorded a 26 per cent growth in domestic sales in the year 2009-10. It is India’s strong sales that
have made her the second fastest growing automobile market after China in the world.
India being one of the world’s largest manufacturers of small cars with a strong engineering base
and expertise, there are still many segments untapped and un-served those entrepreneurs can focus on in
India’s automobile and auto components sector in future.

3. Textiles:
India is famous for its textiles since long time. What is worth mentioning that the style of apparel
is unique from region to state, thus, offering a diversified market for apparel / textile products in the
country? In view of this, India holds good potential to grow as a preferred location for manufacturing
textiles taking into account the huge demand for garments.
Places like Tripura and Ludhiana are, for example, now export hubs for textiles in the country. A
better understanding of the textiles markets and the varied customer needs can greatly help unleash the
potential this sector holds in our country.

4. Social Ventures:
Like many other developmental activities, entrepreneurship development is also context-specific.
The recent social issues providing a different entrepreneurial context has given emergence to yet another
breed of entrepreneurship called’ social entrepreneurship. With a view to ameliorate the social fabric of
the society, increasing number of entrepreneurs has started their social ventures.
SEWA and Lizzat Pappad, for example, are such two social ventures hardly get missed while
mentioning about social entrepreneurship. Muhammad Yunus’s ‘Gramin Bank’ in Bangladesh is the
worldwide known social venture of the recent times.
There is myriad of social issues or problems in the countryside in India, thus, offering opportunity
to young entrepreneurs to plunge into this sector. However, plunging into social ventures is as much
useful is so much challenging also.

5. Software:
India is known for its largest pool of world class software engineer’s world over. IT sector has
contributed substantially to the Indian economy. With one of the largest pool of software engineers, Indian
entrepreneurs can set higher targets in hardware and software development.
With more overseas companies outsourcing contracts to India, business to business solutions and
services emerge as potential activities for the knowledge-based entrepreneurs in future. Entrepreneurs can
cash in on the rise in demand for IT services with innovative and cost effective solutions.

6. Engineering Goods:
India continues to be one of the fastest growing exporters of engineering goods, growing at a rate
of 30.1 per cent. The government has set a target of $110 billion by 2014 for total engineering exports.
Entrepreneurs must capitalise on the booming demand for products from the engineering industry.

7. Franchising:
As a boon of New Economic Policy 1991 of the Government of India, India is now well connected
with the world economies. Hence, franchising with leading brands to spread across the country could also

19
offer ample opportunities for young entrepreneurs especially in services sector like education and health.
With many small towns developing at a fast pace in India, there is vast scope for spreading franchising
business in the countryside in future.

8. Education and Training:

Knowledge being power, on the one hand, and Government’s increasing emphasis on spreading
education, on the other, there is a good demand for education and online tutorial services in the country.
With good facilities at competitive rates, India can attract more students from abroad in coming years
signs of which have already started. Need-based educational programmes with innovative teaching
methods can help in a big way make education develop and flourish as an industry in the country.

9. Food Processing:
Broadly, food processing industries include cannery, meat packing plant, slaughterhouse, sugar
industry, vegetable packing plants, industrial rendering, etc. India’s mainstay is agriculture. Entrepreneurs
can explore many options in the food-grain cultivation and marketing segments. Inefficient management,
lack of infrastructure, proper storage facilities leads to huge losses of food grains and fresh produce in
India.

10. Media:
The media industry has also huge opportunities to offer to young entrepreneurs. With the huge
growth of this segment, any business in this field will help entrepreneurs reap huge benefits. Television,
advertising, print and digital media have seen a boom in business in the recent times and is likely to grow
more in coming times.
According to a report prepared by the Federation of Indian Chamber of Commerce and Industry
(FICCI), digitisation, regionalisation, competition, innovation, process, marketing and distribution will
drive the growth of India’s media and entertainment sector furthermore in coming times.

11. Packaging:
With China invading the markets with cheap plastic goods and packaging materials, there is a good
opportunity to develop good packaging materials to meet domestic and foreign demand. There is a huge
demand from various sectors like agriculture, automotive, consumer goods, healthcare infrastructure and
packaging sectors for plastics.

12. Floriculture:
India’s floriculture segment is small and unorganized. There is a lot to be done in this lucrative sector. The
global trade in floriculture products is worth $9.4 billion. With a 8 per cent growth, it is expected to grow
to $16 billion by 2010. India’s share in world trade is just 0.18 per cent. This is a huge market to be tapped
considering the rising demand for fresh flowers. More awareness and better farming and infrastructure can
boost exports of flowers in coming times.

13. Toys:
Another evergreen industry is toy manufacturing. India has potential to manufacture cost-effective
and safe toys for the world. With Chinese toys being pulled up for toxins, the market for safe and good
quality, toys beckons Indian entrepreneurs.

14. Healthcare Sector:

India’s healthcare sector dismal till the other day has now good prospects to develop in future. The
private sector, that is, individual entrepreneurs can play a vital role in developing this sector. With medical
tourism also gaining momentum, the sector can attract foreigners who are looking for cost- effective
treatment in countries like India.

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15. Biotechnology:
After the software sector, biotechnology opens a huge potential for entrepreneurs in India. Global
evidences confirm that agricultural bio-technology has a major impact on agricultural productivity. That is
why increasing emphasis has been given to research and development in the agro-biotech sector with an
aim to produce crops with high level of tolerance against cold, heat and salinity.

16. Recycling Business:

E-waste will rise to alarming proportions in the developing world within a decade, with computer waste in
India alone to grow by 500 per cent from 2007 levels by 2020, according to a UN study. Therefore, this
sector also opens new vistas of viable business opportunity for entrepreneurs in terms of e-waste
management and disposal activities in large size.

Recently, a national level conference on entrepreneurship called Entrepreneur India 2011 was held on July
15th and 16th at Hotel Claridges, New Delhi. The conference was built across the seven I’s of
entrepreneurship:

(i) Inspire,
(ii) Ideate,
(iii) Individual,
(iv) Incubate,
(v) Innovate,
(vi) Invest, and
(vii) Internationalize to discuss and deliberate on Innovation and Entrepreneurship for unleashing business
opportunities available in the country.

Sources of Business Ideas:

There are millions of entrepreneurs throughout the world and their testimonies suggest that there
are many potential, various sources of new viable business ideassuch as HyreCar, or sources of
entrepreneurship ideas/sources of business opportunities. Some of the more useful great ways to generate
business ideas are outlined below.
Hobbies/Interests
A hobby is a favorite leisure-time activity or occupation. Many people, in pursuit of their hobbies
or interests, have founded businesses. If, for example, you enjoy playing with computers, cooking, music,
traveling, sport or performing, to name but a few, you may be able to develop it into a business. To
illustrate this, if you enjoy traveling, performing and/or hospitality, you may consider going into tourism –
which is one of the biggest industries in the world.
Personal Skills and Experience
Over half of the ideas for successful businesses come from experiences in the work place, e.g. a
mechanic with experience in working for a large garage who eventually sets up his/her own car repair or a
used car business. Thus, the background of potential entrepreneurs plays a crucial role in the decision to
go into business as well as the type of venture to be created. Your skills and experience are probably your
most important resource, not only in generating ideas but also in capitalizing on them.
Franchises
A franchise is an arrangement whereby the manufacturer or sole distributor of a trademark, product
or service gives exclusive rights for local distribution to independent retailers in return for their payment
of royalties and conformity to standardized operating procedures. Franchising may take several forms, but
the one of interest is the type that offers a name, image, method of doing business and operating
procedures.
In the 1980s and early franchising experienced tremendous growth, becoming a much- used
method of going into business for the millions of enterprises that were starting up in the USA and Europe.
In the USA alone, there are over 2,000 types of franchise businesses, accounting for over US$300 billion

21
in annual sales revenue and about a third of all retail sales. Apart from buying a franchise, one can also
develop and sell a franchise concept. There are many directories and handbooks as well as associations,
including the International Franchise Association, which can provide further information.
Mass Media
The mass media is a great source of information, ideas and often opportunity. Newspapers,
magazines, television, and nowadays the Internet are all examples of mass media. Take a careful look, for
example, at the commercial advertisements in newspaper or magazine and you may well find businesses
for sale. Well, one way to become an entrepreneur is to respond to such an offer. Articles in the printed
press or on the Internet or documentaries on television may report on changes in fashions or consumer
needs. For example, you may read or hear that people are now increasingly interested in healthy eating or
physical fitness. You may also find advertisements calling for the provision of certain services based on
skills, for example accounting, catering or security. Or you may discover a new concept for which
investors are required, such as a franchise.
Exhibitions
Another way to find the ideas for a business is to attend exhibitions and trade fairs. These are
usually advertised on the radio or in newspapers; by visiting such events regularly, you will not only
discover new products and services, but you will also meet sales representatives, manufacturers,
wholesalers, distributors and franchisers. These are often excellent sources of business ideas, information
and help in getting started. Some of them may also be looking for someone just like you.
Surveys
The focal point for a new business idea should be the customer. The needs and wants of the
customer, which provide the rational for a product or service, can be ascertained through a survey. Such a
survey might be conducted informally or formally by talking to people – usually using a questionnaire or
through interviews – and/or through observation. You may start by talking to your family and friends to
find out what they think is needed or wanted that is not available. Or, for example, whether they are
dissatisfied with an existing product or service and what improvements or changes they would like to see.
You can then move on and talk to people who are part of the distribution chain that is manufacturers,
wholesalers, distributors, agents and retailers. It would be useful to prepare beforehand a set of questions
which might be put on a questionnaire or used in an interview. Given their close contact with customers,
channel members have a good sense of what is required and what will not sell.
Finally, you should talk to as many customers as possible – both existing and potential customers.
The more information you can get from them, the better. Besides talking to people, you could also get
information through observation. For example, in deciding whether to open a shop on a particular street,
you can observe and count the number of people going past on given days and besides talking to people,
you can also get information through observation.
For example, in deciding whether to open a shop on a particular street, you can observe and count
the number of people going past on given days and compare these to other sites. Or, if you are interested
in an area frequented by tourists, youma be able to set up or market products from a craft business. Or you
may have noticed that there is no decent restaurant or hotel on a tourist route or in a given town. One way
of ensuring that you are not negligent in this area is to be alert at all times to needs and opportunities to do
business.
One entrepreneur apparently went round at every cocktail party asking if anyone was using a
product that did not adequately fulfill its intended purpose. Another monitored the toys of a relative’s
children looking for ideas for a market ruche.
Complaints
Complaints and frustrations on the part of customers have led to many a new product or service.
Whenever consumers complain bitterly about a product or service, or when you hear someone say ‘I wish
there was … “or “If only there were a product/service that could … “, you have the potential for a
business idea. The idea could be to set up a rival firm offering a better product or service, or it might be a
new product or service which could be sold to the firm in question and/or to others.

Brainstorming

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 Brainstorming is a technique or creative problem-solving as well as for generating ideas. The
object is to come up with as many ideas as possible. It usually starts with a question or problem statement.
For example, you may ask “What are the products and services needed in the home today which are not
available?” Each idea leads to one or more additional ideas, resulting in a good number.
When using this method, you need to follow these four rules:
• Don’t criticize or judge the ideas of others
• Freewheeling is encouraged – ideas that seem to be wild or crazy are welcome
• Quantity is desirable – the greater the number of ideas, the better
• Combine and improve upon the ideas of others
Reasons for generating business ideas:
• Business idea generation is a sine-qua-non (inevitable) for business.
• Ideas are generated to respond to market needs
• Ideas are also generated to respond to changing fashions and requirements.
• In order to stay ahead of competition
• To be in tune with latest technology so as to do things better.
• In response to product life cycle
• In order to spread risk and allow for failure.

Process of setting up a small business

Here are 10 steps that are required to start a business successfully. Take one step at a time, and
you'll be on your way to successful small business ownership.
Step 1: Do Your Research
Most likely you have already identified a business idea, so now it's time to balance it with a little
reality. Does your idea have the potential to succeed? You will need to run your business idea through
a validation process before you go any further.
In order for a small business to be successful, it must solve a problem, fulfill a need or offer
something the market wants.
There are a number of ways you can identify this need, including research, focus groups, and even trial
and error. As you explore the market, some of the questions you should answer include:
 Is there a need for your anticipated products/services?
 Who needs it?
 Are there other companies offering similar products/services now?
 What is the competition like?
 How will your business fit into the market?
Don't forget to ask yourself some questions, too, about starting a business before you take the plunge.
Step 2: Make a Plan
You need a plan in order to make your business idea a reality. A business plan is a blueprint that
will guide your business from the start-up phase through establishment and eventually business growth,
and it is a must-have for all new businesses.
The good news is that there are different types of business plans for different types of businesses.
If you intend to seek financial support from an investor or financial institution, a traditional
business plan is a must. This type of business plan is generally long and thorough and has a common set of
sections that investors and banks look for when they are validating your idea.
If you don't anticipate seeking financial support, a simple one-page business plan can give you
clarity about what you hope to achieve and how you plan to do it. In fact, you can even create a working
business plan on the back of a napkin, and improve it over time. Some kind of plan in writing is always
better than nothing.
Step 3: Plan Your Finances
Starting a small business doesn't have to require a lot of money, but it will involve some initial
investment as well as the ability to cover ongoing expenses before you are turning a profit. Put together a
spreadsheet that estimates the one-time startup costs for your business (licenses and permits, equipment,

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 legal fees, insurance, branding, market research, inventory, trademarking, grand opening events, property
leases, etc.), as well as what you anticipate you will need to keep your business running for at least 12
months (rent, utilities, marketing and advertising, production, supplies, travel expenses, employee salaries,
your own salary, etc.).
Those numbers combined is the initial investment you will need.
Now that you have a rough number in mind, there are a number of ways you can fund your small
business, including:
 Financing
 Small business loans
 Small business grants
 Angel investors
 Crowdfunding
You can also attempt to get your business off the ground by bootstrapping, using as little capital as
necessary to start your business. You may find that a combination of the paths listed above work best. The
goal here, though, is to work through the options and create a plan for setting up the capital you need to
get your business off the ground.
Step 4: Choose a Business Structure
Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC)
or a corporation. The business entity you choose will impact many factors from your business name, to
your liability, to how you file your taxes.
You may choose an initial business structure, and then reevaluate and change your structure as
your business grows and needs change.
Depending on the complexity of your business, it may be worth investing in a consultation from an
attorney or CPA to ensure you are making the right structure choice for your business.
Step 5: Pick and Register Your Business Name
Your business name plays a role in almost every aspect of your business, so you want it to be a
good one. Make sure you think through all of the potential implications as you explore your options
and choose your business name.
Once you have chosen a name for your business, you will need to check if it's trademarked or
currently in use. Then, you will need to register it. A sole proprietor must register their business name with
either their state or county clerk. Corporations, LLCs, or limited partnerships typically register their
business name when the formation paperwork is filed.
Don't forget to register your domain name once you have selected your business name. Try these
options if your ideal domain name is taken.
Step 6: Get Licenses and Permits
Paperwork is a part of the process when you start your own business.
There are a variety of small business licenses and permits that may apply to your situation,
depending on the type of business you are starting and where you are located. You will need to research
what licenses and permits apply to your business during the start-up process.
Step 7: Choose Your Accounting System
Small businesses run most effectively when there are systems in place. One of the most important
systems for a small business is an accounting system.
Your accounting system is necessary in order to create and manage your budget, set your rates and
prices, conduct business with others, and file your taxes. You can set up your accounting system yourself,
or hire an accountant to take away some of the guesswork. If you decide to get started on your own, make
sure you consider these questions that are vital when choosing accounting software.
Step 8: Set Up Your Business Location
Setting up your place of business is important for the operation of your business, whether you will
have a home office, a shared or private office space, or a retail location.

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 You will need to think about your location, equipment, and overall setup, and make sure your
business location works for the type of business you will be doing. You will also need to consider if it
makes more sense to buy or lease your commercial space.
Step 9: Get Your Team Ready
If you will be hiring employees, now is the time to start the process. Make sure you take the time
to outline the positions you need to fill, and the job responsibilities that are part of each position. The
Small Business Administration has an excellent guide to hiring your first employee that is useful for new
small business owners.
If you are not hiring employees, but instead outsourcing work to independent contractors, now is
the time to work with an attorney to get your independent contractor agreement in place and start your
search.
Lastly, if you are a true solopreneur hitting the small business road alone, you may not need
employees or contractors, but you will still need your own support team. This team can be comprised of a
mentor, small business coach, or even your family, and serves as your go-to resource for advice,
motivation and reassurance when the road gets bumpy.
Step 10: Promote Your Small Business
Once your business is up and running, you need to start attracting clients and customers. You'll
want to start with the basics by writing a unique selling proposition (USP) and creating a marketing plan.
Then, explore as many small business marketing ideas as possible so you can decide how to promote your
business most effectively.
Once you have completed these business start-up activities, you will have all of the most important
bases covered. Keep in mind that success doesn't happen overnight. But use the plan you've created to
consistently work on your business, and you will increase your chances of success.
Role of Creativity and Innovation
Creativity and innovation are two important traits of a successful entrepreneur. Creativity means
the ability to bring something new into existence. Innovation is the process of doing new things or doing
old things in a new way. Creativity is the process of generating new ideas whereas, innovation involves
translation of ideas into a new business opportunity. Creative ideas are of no use unless and until they are
converted into useful products or services through innovation.
Stages in Creativity Process
A creative idea evolves through a process consisting of the following stages.
1. Germination: A person with imagination and curiosity germinates an idea. For instance, Newton’s
curiosity about apple falling from the tree led to the law of gravitation.
2. Preparation: Once the idea is germinated, efforts are directed towards how to convert the idea into a
useful product or service. In case the idea relates to a new product, information about consumer buying
habits, product design, material requirement etc. may be collected.
3. Incubation: Incubation is a stage of fantasizing and mulling over. This is the stage when the creative
person allows the idea to incubate in his subconscious mind. The person in his subconscious mind gets
enough time to assimilate information about the idea and ponder over it.
4. Illumination: Illumination occurs when the idea resurfaces in a catalytic event. Several cycles of
preparation and incubation may be repeated until the idea takes some realistic shape.
5. Verification: An illuminated idea requires verification before it is accepted as a realistic and useful
application. During the verification stage many ideas may be rejected because they are of little practical
relevance.
Invention and Innovation
Though both invention and innovation require a lot of creativity, they are entirely different
processes. Innovation is the discovery of some new material or method. The resulting idea of an inventor
did not exist before. For example, mathematical calculators and microelectronics were inventions.
Innovation may occur in several forms – introduction of a new product, a new method of distribution,
opening of a new market, locating a new source of raw material, introduction of a new manufacturing
process that has not yet been tested and commercially exploited etc.

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 On the other hand, innovation is a new combination of existing knowledge that results in a useful
and commercially viable product. For example, micro-computer is an innovation made by combining the
inventions mentioned above.
Thus, an inventor produces ideas and adds to the existing knowledge. In contrast, an innovator
implements the ideas to come up with new products and services to satisfy human wants.

Feasibility Study
Feasibility study is a detailed study done by an entrepreneur to ensure that the project is viable.
The feasibility study should contain an analysis of the following.
a. Technical Aspect
b. Commercial Aspect
c. Financial Aspect
d. Socio-economic Aspect
Technical aspect: The technical feasibility of a project involves a critical study of the factors such as
location, size of the plant, raw materials and labour, machinery and equipment, infrastructure etc. Here the
entrepreneur should ensure that the location of plant and the site selected is such that it permits cost-
effective operations of business. Also, in determining the size of the plant, it should be remembered that if
the plant size is smaller than the optimum size, cost of production increases. An entrepreneur must also
examine whether the required raw material, machinery and equipment and infrastructure is available for
carrying out the operations.
Commercial Aspect: Technical feasibility of a project has no meaning if the project is not commercially
viable. Commercial viability of a project requires a study of the present and potential demand for firm’s
product in national and international markets. It also requires an analysis of margin of profit, degree of
competition, market stability etc. Sometimes the services of an expert may be required to find out the
commercial viability of the project.
Financial Aspect: Financial viability of the project can be judged on factors like total estimated cost of
the project, projected cash flow and profitability, financing of the project with reference to the capital
structure, promoter’s contribution to the total project cost etc.
Socio-economic Aspect: A social cost-benefit analysis should be made to judge the national viability of
the project. Every project entails some costs to the nation and produces certain benefits. The contribution
of the project to social objectives such as employment generation, development of infrastructure,
development of backward areas, earning foreign exchange, import substitution etc. is evaluated.
Once the feasibility study is completed, an indepth analytical study of the project is made to decide
selection or rejection of the project. Such an analysis is known as project appraisal. Once the project is
selected, the findings of the feasibility study are presented in the form of a Project Report. This project
report is needed to get sanction for the project from the concerned authorities, including financial
institutions. The project report should comprise the following information.
Name, address and other details of the entrepreneur
 Brief summary of the project
 Inputs for the proposed project like land, building, plant, machinery and equipment, materials etc.
 Financial aspects like sources of finance, cost of fixed assets, working capital, assets and liabilities
 Market potential in relation to estimated present and potential demand, market survey
 Importance of project to national economy

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