EDCI 411: ENTREPRENEURSHIP EDUCATION (30/0: CF 2.

0) Y4S1
Meaning Of Entrepreneurship And Entrepreneurship Education; Characteristics Of
Entrepreneurs; Origin and Emergence of Entrepreneurship as a Field of study; Factors That
Determine Entrepreneurship Growth; Education And Entrepreneurship; Trends In
Employment And Unemployment, Self-Employment And The Informal Sector In Kenya.
Informal Sector Training; How To Start And Develop A Personal Business; Essentials Of
Business Management; Dimensions Of Business Skills Cognition; Micro Financing; Country
Case Studies On Entrepreneurship Skills Development.

Purpose of the Course

The essence of this course is to foster entrepreneurial skills, knowledge and attitudes for an
effective and efficient role to recognize business opportunities, starting a business and
growing a business.

Expected Learning outcomes

By the end of the course, the learner should be able to:
1. Demonstrate understanding of entrepreneurship
2. Develop entrepreneurship skills
3. Evaluate business ideas
4. Apply entrepreneurial skills to effectively manage business

Course content

1. Introduction to Entrepreneurship;
 Definitions of entrepreneur and entrepreneurship; Types of entrepreneurs;
Tasks/Roles of entrepreneur; Entrepreneurial traits; Challenges of
entrepreneurship - Addressing Challenges and Obstacles; The role of
Entrepreneurship in Economic Growth: The Entrepreneurial process –
Meaning; Stages - Ideation, Feasibility Analysis, Business Planning,
Execution, Growth;
2. Evolution of entrepreneurship
 History of entrepreneurship
 Myths associated with Entrepreneurship in Kenya
3. Theories of entrepreneurship –
 Concept and Importance of; Some theories; - Psychological, Motivational,
Sociological, Economic, Resource based, Competence based, Heterogeneous,
Differential, Transactional cost, Industrial organizational economics
 Importance of theories of entrepreneurship
4. Entrepreneurship Competence
 Entrepreneurship skills, coping with competition, Communication. Business
planning, Risk-taking, Decision making, Time management, Leadership,
Instituting and adopting to change
5. The concept of small firms:
 Definition of Small Firms; The link between Entrepreneurship and Small
Business; Entrepreneurship and Small scale Enterprise Development in Kenya;
The role of the Small Business in Entrepreneurship Development; The
relationship between big businesses and small businesses; Roles of Small

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 businesses in the economy; Challenges faced by small businesses/firms in Kenya;
Possible Interventions to the mentioned challenges:
6. Entrepreneurship environment/Business industry environment
 Macro environment; Ethical, Ecological, Social-cultural, Technological,
Political, Physical, Ecological, Demographic,
 Micro environment; competitors, customers, suppliers, public, marketing
intermediaries, Workers and their unions
7. Factors to consider before starting a business in Kenya:
Industry Knowledge; Capital Requirements (Funding and budget); Location;
Political and legal factors; Attitude; Demographic (Market/Target Customer);
Competition; Economic; Technological; Staff; Ethical - ethical principles in
business; Natural; Global factors
8. Managing entrepreneurial growth/Business life cycle:
 Seed & Development;
 Startup;
 Growth,
 Maturity/Stabilization;
 Innovation (Renewal)/Decline
9. Starting the enterprise & Financing the venture
 Forms of business units - Sole Proprietorship, Partnerships, Limited
companies
 Business Entry Options – Franchises, New start-ups, Buying an existing
business
 Entrepreneurial finance:
o Definition of Business Finance;
o The Need for Financing,
o Sources of Business Finance - Debt vs. Equity
o Choosing an appropriate source of Financing
10. Small and medium enterprise policy:
 The Policy Challenge Efforts in Progress,
 Efforts towards enhancing SMEs growth in Kenya,
 Policy approach.
11. Teaching learners to become entrepreneurs:
 Entrepreneurs Education,
 How to teach entrepreneurship: best practices, experiential learning,
knowledge retention,
 Methods of assessment

12. Business Ideas and Business Opportunities

 Sources of business ideas
 Generating Business Ideas
 Identifying opportunities, validation and selecting an entrepreneurial
undertaking
13. Planning the Enterprise/Business Plan
• Business Plans - The need for a Business Plan
• Contents of a Business Plan

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 o Executive summary, Background information, Marketing plan,
Management and organization, Financial plan, Industry analysis, risk
analysis
 Presenting the Business Plan
14. Government Schemes for Entrepreneurial Development
 Kenya’s efforts/steps at Promoting Entrepreneurship and Innovations
 Some Specific Entrepreneurship Schemes in Kenya

Instructional Methods: Discussion, Interactive Lecture, Learner presentations

Instructional Materials: Laptop and LCD, e-books, Hand-outs and Textbooks, Charts, video
clips, open educational resources, links to internet based materials.

Learner Assessment at Course Level

Continuous assessment tests 40%
End of Semester Examination 60%
Total 100%

Core Reading Materials

Erika H.J. & Wooten, L. P. (2022) The Prepared Leader: Emerge from any crises more
resilient than before. Wharton School Press. E-book. ISBN: 9781613631621
Min, B., Goldsby, M. & Rob, M. (2022), Design-Centred Entrepreneurship. Routledge e-
book. ISBN: 9781000570205.
Kimbali, D. C. & Lussier, R. N. (2020). Entrepreneurship Skills for New Ventures:
Routledge e-book. ISBN: 9781000767001

Recommended Reference Materials

Baltzan, P and Philips, A. (2008). Business-driven information Systems. Mc Graw-Hill:
Maidenhead
Birkinshaw, J. (2010). The critical need to reinvent Management. Business Strategy review:
Londo.
Fills, I. (2010). The role of creativity in entrepreneurship. Journal ofEnterprising Culture:
Singapore
Ghillyer, A.W (2011) Management: A real world approach. 2 nd ed. Mc Graw-Hill:Maiden-
head
EDCI 411: ENTREPRENEURSHIP EDUCATION (NOTES)
Introduction to Entrepreneurship
 The term entrepreneurship denotes the process of setting up one’s own business
venture as distinct from pursuing any other economic activity or any employment or
practicing some profession. The person who establishes business is termed as
entrepreneur. The output of an entrepreneurial process ends up in establishing an
enterprise.

Entrepreneurship – Meaning, Concept and Definition

 Entrepreneurship generates employment opportunities to many people besides
providing self-employment to the entrepreneur. Any business venture started triggers
a variety of economic activities like purchasing raw materials, creating employment

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 opportunities and so on. Thus, entrepreneurship becomes crucial for overall economic
development of a nation.
 Entrepreneurship is regarded as one of the four major factors of production besides
the other three namely land, labour and capital.
 It is generally believed that entrepreneurs are born. But no country or society can
afford to wait for the birth of entrepreneurs to pursue its development agendas. The
pace of economic development of any country cannot be accelerated without creating
a sense of awareness about entrepreneurship among the people. The latter should be
made to take pride in claiming to be a job provider rather than a job seeker.
 The Government and various other agencies involved in promoting entrepreneurship
should carry on the noble task of engendering a spirit of entrepreneurship among the
people who otherwise seek job.
Concept of ‘Entrepreneur’
 Entrepreneur originates from the French word ‘entreprendre’ which means
‘to undertake’. (Akanni, 2010).
 In the 16th century the term was used in France to refer to the Frenchmen who
organized and led military expeditions.
 In the early sixteenth Century, the term was applied to refer to those who were
engaged in military expeditions. Subsequently, in the seventeenth century it was
extended to cover civil engineering activities such as construction and fortification.
 It was only in the beginning of the eighteenth century, that the term entrepreneurship
was used in the realm of economics. Since then the term entrepreneur is used in many
ways and various views about entrepreneur began to surface.
 In Business context it means to start a business, identify business opportunity,
organize resources, manage and assume the risk of a business or enterprise.
 The term was first applied to business in the early 18th century by Richard Cantillon,
an Irishman living in France to refer to economic activities. According to him ‘an
entrepreneur is a person who buys factor services at certain prices with a view to
selling its product at uncertain prices”. An entrepreneur is a bearer of risk which is
non-insurable.
 JB Say, another Frenchman expanded Cantillon’s ideas and conceptualized an
entrepreneur as an organizer of a business firm, central to its distributive and
production functions. According to Say, an entrepreneur is the economic agent who
unites all means of production, the labour force on the one and the capital or land on
the other hand; and who finds the value of the products of his results from their
employment, the reconstitution of the entire capital that he utilizes and the value of
the wages, the interest and the rent which he pays respectively; as well as profit
belonging to himself. He laid emphasis on the functions of coordination,
organization and supervision. The entrepreneur is an organizer and speculator of a
business enterprise. He lifts economic resources from an area of lower into an area of
higher productivity and greater yield.

 An ‘entrepreneur’ means different things to different people.

o In Economics (a social science that studies the production, distribution, and

consumption of goods and services), an entrepreneur is a person who
brings resources, labour, materials, and other assets into combinations
that make their value greater than before, introduces changes, innovations and
order.

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 o In Psychology (the scientific study of mind and behaviour), an entrepreneur
is a person driven by certain forces-the need to attain something,
experiment, or escape the authority of others.
o To a Businessman, an entrepreneur is a threat, an aggressive competitor.

 Although being an entrepreneur means different things to different people, there is

agreement that we are talking about a kind of behaviour that encompasses:
(i) Initiative-taking
(ii) The organizing and reorganizing of social and economic
mechanisms to bundle resources in innovative ways, and
(iii) The acceptance of risk, uncertainty and/or the potential for failure.
 “An entrepreneur can therefore be described as a person who tries to create something
new, organizes production, and undertakes risks and handles economic
uncertainty involved in enterprise”(Havinal,2009,p.96).

 Successful entrepreneurs have entrepreneurial-mind-set i.e. They value

uncertainty in the marketplace and seek to continuously identify opportunities with
the potential to lead to important innovations. Accordingly, entrepreneurs are now
broadly classified into three groups namely risk bearer, organizer and innovator.
(i) An Entrepreneur as a Risk Bearer
 Richard Cantillon, an Irish man described the entrepreneur to be a person who
assumes risk inherent in the venture started by him.
 An Entrepreneur acts as an agent combining all factors of production to produce a
product or service in order to sell at an uncertain price in future.
 Knight also describes an entrepreneur to be an economic functionary who undertakes
the risk of uncertainty which cannot be insured or capitalized or salaried.
 In nutshell, entrepreneur is described to be a risk taker.

(ii) An Entrepreneur as an Organizer

 According to Jean Baptize Say, an entrepreneur is one who brings together various
factors of production and creates an entity to produce product or service and
supervises and co-ordinates several functions in the process. He further elaborates that
an entrepreneur faces a great deal of obstacles and misfortunes and undergoes mental
agony and anxieties in the process of organising any venture. In sum, entrepreneur is
described to be an organizer.

(iii) Entrepreneur as an Innovator

 Joseph A Schumpeter in the year 1934 used innovation as a criterion to define an
individual as entrepreneur. According to him, entrepreneur is one who
i. Introduces a brand new product in the market
ii. Institutes new technology to produce a product
iii. Discovers new course of supply of raw materials
iv. Discovers new product hitherto untapped
v. Puts in place a new form of organisation by establishing a monopoly or
by dismantling existing monopoly.

 Thus, in all the concept of entrepreneur is intimately connected with three core
elements namely risk bearing, organising and innovating.

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 According to J.A. Schumpeter Joseph A. Schumpeter, “Entrepreneurship is essentially
a creative activity. It consists of doing such things as are generally not done in
ordinary course of business. An entrepreneur is one who innovates, i.e. carries out
new combination or enterprise.”
 In the words of A.H. Cole, “The purposeful activity of an individual or group of
associated individuals, undertaken to initiate, maintain or earn profits by production
and distribution of economic goods and services.”
 As per Mary Coulter, “Entrepreneurship is the process whereby an individual or
group of individuals use organised efforts to pursue opportunities to create value and
grow by fulfilling wants and needs through innovation and uniqueness, no matter
what resources the entrepreneur currently has.”

Characteristics of an Entrepreneur

1. Spirit of Enterprise: Entrepreneur should be bold enough to encounter risk arising

from the venture undertaken. An Entrepreneur should not get discouraged by setbacks
or frustrations emerging during the course of entrepreneurial journey.

2. Self Confidence: Entrepreneur should have a self confidence in order to achieve

high goals in the business. The negativities like inconvenience, discomfort,
disappointments, rejections, frustrations and so on should not weaken his steely
resolve to make the venture a grand success.

3. Flexibility: Entrepreneur should not doggedly stick to decisions in a rigid fashion.

Entrepreneur should change the decisions made already in the light of ever-changing
business environment.

4. Innovation: Entrepreneur should contribute something new or something unique to

meet the changing requirements of customers namely new product, new method of
production or distribution, adding new features to the existing product, uncovering a
new territory for business, innovating new raw material etc.,

5. Resource Mobilization: Entrepreneur should have the capability to mobilize both

tangible inputs like manpower, money materials, technology, market, method etc.,
which are scattered over a wide area and certain intangible inputs like motivation,
morale and innovativeness cannot be purchased in the market outright. Entrepreneur
has to marshal all these tangible and intangible inputs to produce a product
successfully. Thus entrepreneurship is a function of gap filling and input completion.

6. Hard work: Entrepreneur should put in strenuous efforts and constant endeavours
to accomplish the goals of the venture successfully. They have to courageously face
uncertainties, risks and constraints. They should not blame the uncontrollable factors
for the misfortunes experienced during the course of their entrepreneurial venture.
They should spend their energy in addressing the issues to stay successful.

7. Leadership: Entrepreneur should be able to influence team members by showing

sympathy and empathy so as to enable them to contribute positively towards the goals
of the venture. Entrepreneur should lead others from the front and by personal
example and should walk the talk and effectively take all the followers to activate the
goals of the venture.

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8. Foresight: Entrepreneur should have a foresight to visualize future business
environment. In other words, Entrepreneur should foresee the likely changes to take
place in market, consumer attitude, technological developments etc., and take timely
actions accordingly.

9. Analytical Ability: Entrepreneurs should not make decisions on the basis of own
prejudice or personal likes and dislikes. Entrepreneur should be able to objectively
analyse the situation and act accordingly. They should abstain from taking emotional
or hasty decisions when they are overwhelmed by emotions. In simple words
Entrepreneur should take rational decisions after examining the various aspects of a
problem.

10. Decision Making: Entrepreneur has to take timely and correct decision with
regard to nature and type of product to be produced, type of technology to be adopted,
type of human assets to be employed, location of the enterprise, size of the unit,
volume of production and so on. The very success of any enterprise hinges on prompt,
correct and relevant decisions made by the entrepreneur. Entrepreneur should
rationally examine the various factors influencing the decision and take appropriate
decisions after giving due weight to all the risks embedded in various factors.

The role of Entrepreneurship in Economic Growth:

Entrepreneurship plays a pivotal role in the economic development of a country. The
following points highlight the significance of entrepreneurship.

1. Innovation: Entrepreneurship and innovation are closely intertwined with each

other. It is no exaggeration to say that innovation cannot happen in any country
without entrepreneurship. Entrepreneurs have contributed in no small measure to
economic development of any country by innovation. They bring about innovation by
building a brand new product or by constantly upgrading existing product or by
tapping new market for existing product in a new territory or by inventing a new
technology to produce a product or service and so on. All these innovative exercise
ensures rise in income and output in the economy.

2. Contribution to Gross Domestic Product (GDP): Promotion of entrepreneurship

all across the country would undoubtedly add to Gross Domestic Product and
National Income of a country. It is stated that countries like America, Japan, and
Germany and so on have recorded a phenomenal increase in the GDP, per capital
income and national income, due to stupendous growth of entrepreneurship.
N.B:
 Gross domestic product (GDP), total market value of the goods and services
produced by a country’s economy during a specified period of time.
In economics, the final users of goods and services are divided into three main
groups: households, businesses, and the government.
 One way gross domestic product (GDP) is calculated—known as the
expenditure approach—is by adding the expenditures made by those three
groups of users.
 Accordingly, GDP is defined by the following formula: GDP = Consumption
+ Investment + Government Spending + Net Exports or more succinctly

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 as GDP = C + I + G + NX where consumption (C) represents private-
consumption expenditures by households and non-profit organizations,
investment (I) refers to business expenditures by businesses and home
purchases by households, government spending (G) denotes expenditures on
goods and services by the government, and net exports (NX) represents a
nation’s exports minus its imports.
 GDP per capita (also called GDP per person) is used as a measure of a
country’s standard of living. A country with a higher level of GDP per capita
is considered to be better off in economic terms than a country with a lower
level.

3. Balanced Regional Development: Encouragement of entrepreneurship in under

developed and undeveloped regions of a country through various incentives and
concessions is more likely to promote balanced regional development across the
country. Besides, essentially it checks the migration of rural population to urban
centers in pursuit of employment.

4. Export Promotion: Entrepreneurship helps a country not only earn precious

foreign exchange but also preserve it. If entrepreneurship is encouraged to produce
export oriented goods, it can significantly add to foreign exchange reserve of a
country. Similarly, if entrepreneurship is encouraged to produce products which are
usually imported from foreign countries i.e. import substitute goods, it can help the
country save precious foreign exchange. The comfortable foreign exchange reserve
position is more likely to address the adverse balance of payment position if any.

5. Full utilization of Latent Resources: Promotion of entrepreneurship across the

country leads to better utilization of economic, human, material and natural resources
which would remain otherwise unutilized in a country. In other words, establishment
of small, medium and micro enterprises all over the country paves way for harnessing
all latent resources in the country.

6. Reduction of Concentration of Economic Power in Few hands: Promotion of

entrepreneurship by encouraging small, medium and micro enterprises prevents the
concentration of economic power in the hands of few large entrepreneurs. It promotes
faster industrialization and brings about equitable distribution of wealth in the society.

7. Better Standard of Living: Entrepreneurs provide a lot of well-being measures to

their employees besides paying salaries and wages. This unmistakably helps
employees upgrade their standard of living. Some of entrepreneurs who have genuine
concern for the welfare of the general public, supply goods of good quality at fair
price. This in turn helps consuming public save more money and spends liberally on
comfort and convenience goods which are supposed to enhance the standard of living
of the general public. Higher standard of living brought about by entrepreneurship
narrows down the gap between haves and have nots.

Entrepreneur, Intrapreneur and Manager - a Comparison

Intrapreneur
 An ‘Intrapreneur’ is one who thinks and acts like an entrepreneur for the
firm’s development during the course of employment in an organisation.

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  An Intrapreneur is described to be an inside entrepreneur or an entrepreneur
within a large firm who uses entrepreneurial skills without incurring the risk
associated with those activities.
 Intrapreneurs are usually employees of a company who are assigned to a
particular project or who are assigned to work on a special idea.
 An Intrapreneur usually uses the resources and capabilities of the firm to work
on the project or on the idea.
Following are the differences between Entrepreneur and Intrapreneur:

Differences between Entrepreneur and Intrapreneur

Difference between ‘Entrepreneur’ Vs. Manager’

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Entrepreneurial Functions

I. Promotional Functions

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(1) Discovery of Idea: The first and foremost function of entrepreneur is idea
generation. A person may conceive his own ideas or develop the ideas contributed by
others. Ideas can be generated through several ways like own experience and
exposure of entrepreneur, keen observation of environment, education, training,
market survey, environmental scanning and so on. After the ideas were collected,
entrepreneur has to weigh objectively each and every idea and finally select an idea
which is worth pursuing commercially.

(2) Determining the business objectives: Entrepreneur has to develop business

objectives in the backdrop of nature of business and type of business activity i.e.
nature of business, manufacturing or trading, type of business organisation chosen so
that he/she can organise the venture in accordance with the objectives determined by
him/her.

(3) Detailed Investigation: Entrepreneur has to analyse in detail the product proposes
to produce. In other words, Entrepreneur should investigate commercial feasibility of
the product proposed to be produced and conduct market study to ascertain the
potential demand for the product. Besides, Entrepreneur has to probe the sources of
supply of various inputs required for manufacturing the proposed product, their
respective prices and other terms and conditions

(4) Choice of form of enterprise: Entrepreneur has to choose the appropriate form of
organisation suited to implement the venture. There are various forms of organisation
namely sole proprietor, partnership, company and co-operatives etc. which are in
existence. The selection of appropriate form of organisation is made after considering
the factors like nature of product to be produced, size of investment, nature of
activities, size of organisation, nature of liability of owners, retention of control,
degree of risk involved, scale of operations, stability and so on.

(5) Fulfilment of the formalities: Having chosen the appropriate type of

organisation, entrepreneur has to take necessary steps to establish the form of
organisation chosen. As regards sole trader, the formalities are barest minimum. In the
case of partnership firm, entrepreneur has to arrange for partnership deed and he has
to get the deed registered. There are lot of formalities to be fulfilled in the case of
registration of company and co-operative form of organisation. Promoter has to take
all necessary steps for establishing the form of organisation.

(6) Preparation of Business Plan: Entrepreneur has to prepare a business plan or

project report of the venture that he is proposing to take up. This plan helps
entrepreneur to achieve various objectives formulated within a specified period of
time.

(7) Mobilisation of funds: Entrepreneur has to take steps to mobilise capital needed
to implement the venture. Entrepreneur has to estimate the fixed capital and working
capital required for running the project. Then the entrepreneur has to initiate steps to
build funds from various channels like own funds, borrowing from close circles,
banks, financial institutions, venture capitalists, issue of shares and debentures, term
loans and so on to finance his fixed capital requirement.

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(8) Procurement of Machines and Materials: Entrepreneur has to locate the various
sources of supply of machineries and equipment and materials. Entrepreneur has to
collect details from the various sources of supply and screen them for selecting the
best source of supply.

II. Managerial Functions

(i) Planning: Under planning, entrepreneur has to lay down the objectives, goals,
vision, mission, policies, procedures, programmes, budget, schedules etc., for
enabling the venture to proceed towards established destinations.

(ii) Organising & Staffing: Entrepreneur puts in place suitable organizational

structure to perform various managerial functions namely choosing the type of
organisation, creating departments, fitting the human resources to appropriate
organisation slots, defining and delegating authority, distributing responsibility and
creating accountability for efficient performance of activities.

(iii) Directing: In the realm of directing, entrepreneur has to motivate, lead, guide and
communicate with subordinates on an ongoing basis in order to accomplish pre-set
goals. The process of directing involves issuing orders and instructions, guiding,
counseling and mentoring of employees, supervising employees, maintaining
discipline, motivating employees and providing leadership.

(iv) Controlling: Entrepreneur has to put in mechanism to evaluate the performance

of employees across the organisation. The various steps involved in control function
includes fixing performance standards, measuring the actual performance, comparing
actual performance with standards, finding out causes for deviation if any,
undertaking corrective measures to bring actual performance to standards set. He/she
may use various control techniques like account, auditing, management information
system, network analysis, cost control, financial tools etc.,

(v) Coordination: Entrepreneur has to evolve mechanism to pull together the diverse
functions performed by various departments or teams and direct them towards the
established goals of the organisation for accomplishment.

III. Commercial Functions

(i) Production or Manufacturing: Under production function, entrepreneur has to

take decision relating to selection of factory site, design and layout, type of products
to be manufactured, research and development, product design etc., The efficient and
effective performance of production function depends on the proper production
planning and control to a major extent.

(ii) Marketing: Entrepreneur has to carry out following functions pertaining to

marketing aspect namely consumer research, product planning and development,
standardization, packaging, pricing, warehousing, distribution, promotion etc., The
very success of marketing function is very much linked with selection of appropriate
marketing mix. The term marketing mix denotes the combination of four components
namely product, price, promotion and physical distribution in the case of physical

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products and three more components are included in the case of service products
namely people, process and physical evidence.

(iii) Accounting: Entrepreneur has to arrange to prepare trading and profit and loss
account in order to know the profit or loss incurred out of operation of the business
and prepare balance sheet to know the financial status of business at a particular day.
Besides, cash flow and fund flow statements are prepared to ensure the adequacy of
funds and cash for meeting various working capital needs of the business.

(iv) Finance: In the sphere of financial function, an entrepreneur has to take decisions
like choosing the right type of financing, framing the best dividend policy, acquiring
of funds, efficiently managing fixed and current assets, maximizing shareholders
wealth and investing of funds efficiently and effectively.

(v) Human Resource Management: Entrepreneur has to estimate the manpower

needs of the enterprise and accordingly decide the size of manpower required for
various slots of organizational structure. After determining the required man power
the entrepreneur has to organise the performance of following functions pertaining to
human resources namely arranging for recruitment, selecting manpower, induction
and training, determining compensation structure and incentives, designing
motivation programmes, structuring well-being measures for employees, putting in
place safety mechanism at work place, performance evaluation and career
advancement and structuring social security programmes.

For Own Thinking

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After the completion of the academic career, which engagement would you like to opt
for after considering the following factors?

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 TYPES OF ENTREPRENEURS

 Entrepreneurs in business are different according to the type of activity undertaken by

him/her.
 Find summary in the figure below:

Classification According to Function

1. Innovating Entrepreneur: Innovative entrepreneur is one who is always focused on

introducing a new project or introducing something new in the venture already started. They
constantly observe the environment around them; collect information and analyse them in

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order to contribute something a new in the venture. Their innovation may take the form of
brand new product, upgraded product, discovering untapped market, new method of
production, reengineering of existing product, new method of distribution of product,
simplification of complex process, adoption of a distinct process and so on.

2. Imitative Entrepreneur: Imitative entrepreneur is one who simply imitates existing skill,
knowledge or technology already in place in advanced countries. A simply reengineer or
redesign the products developed in advanced countries and produce a version suited to their
local conditions. For example, many electronic products invented in advanced countries are
simply reengineered in developing countries. Similarly expensive medicines developed in
advanced countries are simply reengineered by changing the composition of elements or
changing the process of production.

3. Fabian Entrepreneur: These entrepreneurs are said to be conservatives and skeptical

about plasticizing any change in their organisation. They are of risk-averse type. They do not
simply change to the changes happening in the environment. But they adapt themselves to the
changes only as a last resort when they fear that non adaptability to changes will inevitably
lead to loss or collapse of the enterprise. Their dealings are governed by customs, religion,
tradition and past practices handed down to them by their ancestors. They would like to
follow in the footsteps of predecessors. Example;

4. Drone Entrepreneur: Drone entrepreneurs are those who are totally opposed to changes
unfolding in the environment. They used to operate in the niche market. They are similar to
Fabian entrepreneur in doggedly pursuing their conventional practices. The main difference
between Fabian entrepreneur and drone entrepreneur lies in the fact that while Fabian
entrepreneur adapts to changes eventually as a last resort, drone entrepreneur never adapts
himself or herself to change, Example;

Classification According to Type of Business

1. Business Entrepreneur: Business entrepreneur is called solo entrepreneur. He/she is the

one who conceives an idea for a new product/service and establishes a business enterprise to
translate his idea into reality. He/she may establish small or large enterprise to commercially
exploit his/he idea. He/she takes up production, operations and pursues marketing activities.

2. Trading Entrepreneur: Trading entrepreneurs are those who restrict themselves to

buying and selling finished goods. They may be engaged in domestic and international trade.
Their core strength lies in distribution and marketing. They get their income by way of
commission and marketing.

3. Industrial Entrepreneur: These are entrepreneurs who manufacture products to cater for
the needs of the consuming public after identifying the need left unfulfilled by the
manufacturer hitherto. They may be small, medium and large entrepreneurs. Industrial
entrepreneurs mobilise the resources of various types and create an entity to manufacture the
products or service. They add utility to products rolled out by them which is termed as value
addition.

4. Corporate Entrepreneur: Corporate entrepreneur is called promoter. He/she takes

initiative necessary to start an entity under corporate format. He/she arranges to fulfil the
formalities to start a corporate entity under Company law. Corporate entrepreneur assembles
all the resources and put in place organisation to run the business on a day-to-day basis. In

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corporate form of organisation, ownership and management are separated. Corporate entities
are registered under the Companies Act or under the Trust Act. Corporate entrepreneurs
install a team of experts to manage the entity on a day to day basis.

5. Agricultural Entrepreneur: Agricultural entrepreneurs are those entrepreneurs who raise

farm products and market them. They use the various inputs like labour, fertilizer, insecticide,
water technology etc. to raise the products and market their products either directly or
through co-operative entities or through brokers or through tie up with large retailers. Those
who raise allied products like poultry, meat, fish, honey, skin, agricultural implements,
flower, silk, fruits, prawn etc., are called agricultural entrepreneur. In short these
entrepreneurs pursue their venture in agriculture and allied sector.

6. Retail Entrepreneurs: Retail entrepreneurs are those who enter into venture of
distributing the end-product to final consumer while wholesale entrepreneurs take up the
venture of distributing the product to retailer. They used to buy the goods in small quantities
from numerous wholesalers and make it available different products of different brands under
one roof to end consumer.

7. Service Entrepreneurs: Service entrepreneurs enter into the venture of supplying service
products to end consumers. Hoteliers, airlines, banking, insurance and financial service
providers, repair service organisation, bus operators, train service, advisory organisation,
advertising firms, manpower supplier etc., come under service entrepreneur’s category.

Classification based on Technology Adopted

1. Technical Entrepreneur: Technical entrepreneurs are such of those craftsmen like

welder, fitter, moulder, draughtsman, turner, carpenter, goldsmith, tailor, photographer,
repairer, weaver, sculptor, potter, wiremen or so on that start small ventures. They convert
raw materials into products/service of high quality. They simply focus on production rather
than on marketing. This type of entrepreneur demonstrates their creative talents by producing
innovative products. Their strength lies in skill or knowledge of producing specialized
product.

2. Non-technical Entrepreneur: Non-technical Entrepreneurs are those who do not possess

any technical competence to produce the goods or service but have special talents to market
the products successfully or expertise to distribute the products produced by technical
entrepreneur effectively to channel members and end consumers.

3. Professional Entrepreneur: Professional entrepreneur is one who is having a rich

expertise in starting a venture but lack interest in continuing the venture as a manager or as a
owner. He/she simply sells out the venture started by him to someone else after its successful
take-off. They keep on conceiving new ideas to develop alternative projects. In short, these
entrepreneurs have got professional expertise in starting the venture and exiting it after the
establishment.

Classification based on their Motivation

1. Pure Entrepreneur: Pure entrepreneurs are individuals who are propelled to enter into
venture by psychological and economic motives. Their egos do not permit them to work for
somebody else. They nurture desire of starting a particular venture and earning high profit
there from and thus attaining a social status. They apply their knowledge, skill and insight in

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making the venture a great success in order to earn maximum profit out of the venture.
Examples…

2. Induced Entrepreneur: An induced entrepreneur is one who is inspired to take up

entrepreneurial activity thanks to entrepreneurship friendly policies put in place by the
Government. In other words, concessions, incentives and soaps provided by the government
drive them to enter into venture. Government provides a great deal of support in the form of
loans, subsidies, nominal rate of interest, tax breaks, tax holidays, training, import of
technology from abroad, concessions for export oriented item, allotment of sheds, and lands
at subsidized price etc. impel the potential entrepreneurs to start the venture.

3. Motivated Entrepreneur: Motivated entrepreneurs are those motivated to take up venture

by the desire for self fulfilment. They are motivated to produce and market product or service
by sheer prospect of making huge profit. They are further motivated to develop the venture to
a saleable stage so that he/she can sell the venture at a super profit to certain
entrepreneurs(buyers) who do not like to take risks in setting up a new venture but desire to
buy well developed venture promising great profit prospects.

4. Spontaneous Entrepreneur: These entrepreneurs have natural inclination to start venture.

They are supposed to be bold, optimistic and enterprising persons. They have passion for
meeting the challenges. Their inner urge and inborn traits drive them to commence their
ventures.

Classification Based on Development Stage

1. First Generation Entrepreneur: First generation entrepreneur is one who starts venture
by virtue of his knowledge, skill, talent and competence. He/she innovates a product/service
by technical expertise possessed by him/her. These entrepreneurs do not have any family
background or prior exposure to the venture initiated by them. They are self-made
entrepreneurs.

2. Modern Entrepreneur: Modern entrepreneur is one who keenly observes the dynamics of
the market with eagle eye and identifies the unfilled gaps, if any in product/service marketed.
He/she takes initiative in starting the venture to cater to the unmet needs of the market.

3. Classical Entrepreneur: Classical entrepreneur is one who starts his own venture as a
family business. They are called life timers. They engage in business as a matter of routine.
Their prior exposure to business environment impels them to commence venture of their own.
Entrepreneurs from the business families are called classical entrepreneurs. For instance
where son of provision merchant start his own provision shops, the former is called classical
entrepreneur.

Classification According to Area

1. Urban Entrepreneur: Entrepreneur who commences his entrepreneurial activity in urban

areas like State Capital, District Headquarters, Towns, Municipalities etc., They may be an
industrial entrepreneur or corporate entrepreneur or retail entrepreneur.

2. Rural Entrepreneur: These are people who start venture in rural locations. They are
provided a lot of economic and fiscal incentives to start their venture in rural and semi urban
areas in order to check the exodus of rural people to urban centres in pursuit of employment

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opportunity. Thanks to their immediate access to material, labour or other facilities at low
cost. As a result the cost of operation of rural ventures tends to be low. Agricultural and
trading entrepreneurs prefer to set up their venture in rural areas.

Classification According to Ownership

1. Private Entrepreneur: Ventures started by individual either singly or collectively at their

own risk after mobilizing various resources in order to earn profit are called private
entrepreneurship.

2. State Entrepreneurship: Trading/industrial ventures started by Government under

various formats like company, corporation, departments, board denotes state
entrepreneurship.

3. Joint Entrepreneurship: Ventures started and owned by both private individuals and
government denote joint ownership.

The Entrepreneurial process

 The entrepreneurial process involves identifying a market opportunity, developing a
viable business concept, planning and launching the business, and managing its
growth.
 This entrepreneurial process thus involves transforming ideas into successful
businesses through strategic planning and execution
 The entrepreneurial process can be divided into five key stages/phases:
i. Ideation
ii. Feasibility Analysis
iii. Business Planning
iv. Execution
v. Growth
 Each stage is crucial and requires distinct considerations and actions to increase the
chances of success.

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 i. Ideation
 Ideation or idea generation is the stage where entrepreneurs generate and refine
business ideas. It involves identifying a problem or opportunity in the market and
developing innovative solutions. Creativity, market awareness, and customer needs
are crucial during this stage.
 Entrepreneurs can brainstorm ideas individually or in teams, conduct market research
to identify gaps and trends and seek feedback from potential customers and industry
experts. The goal is to build a wide range of ideas and evaluate their feasibility and
potential for success.

Tips for Ideation

 Engage in brainstorming sessions to generate a wide range of ideas.

 Conduct market research to validate the demand and viability of your ideas.
 Improve your concept by seeking feedback from potential customers and
industry experts.

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 ii. Feasibility Analysis
 Feasibility analysis is the stage where entrepreneurs assess their business idea’s
viability and potential success. It involves evaluating market potential, competition,
resources, and risks.
 Market research is essential to understand the target market’s size, demographics, and
purchasing behaviours. Competitive analysis helps identify existing players, their
strengths, weaknesses, and opportunities for differentiation.
 Assessing available financial and operational resources helps determine the idea’s
feasibility.
 Entrepreneurs must also evaluate potential risks and challenges, such as regulatory
requirements, technological constraints, and market uncertainties. This analysis helps
them make informed decisions about whether to pursue the idea, modify it, or
abandon it.
Tips for Feasibility Analysis:
 Identify your target market and understand its size, demographics, and needs.
 Analyze your competition to identify unique selling points and differentiation
strategies.
 Assess the financial and logistical requirements to implement your idea.

iii. Business Planning

 Business planning is the stage where entrepreneurs create a detailed roadmap for their
venture. It involves developing a business model, crafting a marketing strategy,
establishing financial projections, and setting operational goals.
 The business model outlines how the venture will create, deliver, and capture value. It
defines the target customer segments, value proposition, revenue streams, and cost
structure. The marketing strategy outlines how the product or service will be
positioned, promoted, and distributed to reach the target market effectively.
 Financial projections estimate revenue, expenses, and profitability over a specific
period. They help entrepreneurs understand the business's financial viability and
funding requirements. Setting operational goals and defining key performance
indicators (KPIs) provides a clear focus for implementation and evaluation.
Tips for Business Planning
o Define your business model and your value proposition.
o Develop a marketing strategy highlighting your target audience, channels, and
messaging.
o Create realistic financial projections and consider various funding options.

iv. Execution
 Execution is the stage where entrepreneurs transform their plans into action. It
involves building a team, developing products or services, and launching the business.
 This stage requires effective project management, resource allocation, and
adaptability to navigate challenges and capitalize on opportunities.
 Building a talented team is crucial. Entrepreneurs need to identify the necessary skills,
recruit the right people, and create a culture that aligns with the vision and values of
the business.
 Developing and refining the product or service based on market feedback is essential
to meet customer needs and differentiate from competitors.

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  Launching the business involves bringing the product or service to market,
establishing operations, and implementing marketing and sales strategies. It requires
effective coordination of activities, monitoring progress, and making adjustments as
needed.
Tips for Execution

 Build a talented team with complementary skills and shared values.

 Prioritize customer feedback and iterate your products or services accordingly.
 Continuously monitor key metrics and adjust your strategy based on market
dynamics.

v. Growth
 The final stage of the entrepreneurial process is growth. This stage involves scaling
the business, expanding into new markets, and optimizing operations.
 It involves strategic decision-making, resource allocation, and continuous innovation
to sustain and increase market share. Entrepreneurs must seize growth opportunities
while maintaining the core values and vision that led to their initial success.
 Entrepreneurs must develop growth strategies that align with their long-term vision.
This may include entering new markets, expanding product lines, forming strategic
partnerships, or pursuing mergers and acquisitions. Marketing, sales, and customer
acquisition strategies are crucial in attracting and retaining customers.
 Optimizing operations involves streamlining processes, leveraging technology, and
improving efficiency. By constantly adjusting to changing market dynamics,
entrepreneurs can stay ahead of their competitors and take advantage of new
opportunities.
Tips for Growth

 Develop a growth strategy that aligns with your long-term vision.

 Invest in marketing, sales, and customer acquisition strategies to expand your reach.
 Continuously innovate and adapt to changing market dynamics.

Challenges of entrepreneurship - Addressing Challenges and Obstacles

 The challenges are inherent in the dynamic nature of entrepreneurship and play a
crucial role in shaping an entrepreneur’s path to success.
 Subsequently, entrepreneurs can employ various solutions to mitigate the challenges
and increase their chances of success.
 Key challenges faced by entrepreneurs in performing entrepreneurship and their
mitigation and discussed below:

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 Challenge and Obstacle Mitigation/Solution:

1. Financial Uncertainty: Entrepreneurs often = Diversify funding sources by exploring

grapple with financial instability, especially options like bootstrapping, seeking angel
during the early stages of their ventures. Securing investors, crowd funding, or securing
funding, managing cash flow, and ensuring loans. Develop a robust financial plan
sustainable profitability can be daunting tasks and regularly monitor cash flow to ensure
sustainability
2. Market Competition: The competitive landscape = Conduct accurate market research to
can be fierce, with established players and new develop unique selling factors and target
entrants vying for market share. Entrepreneurs specialized customers. Continuously
must develop strategies to differentiate their innovate and focus on delivering superior
products or services and stay relevant. value to customers to stay ahead of
competitors.

3. Risk Management: Entrepreneurship inherently = Develop a risk management plan that

involves risk-taking. Calculated risks can lead to identifies potential risks and outlines
growth, but poor risk management can result in strategies to mitigate them. Consult with
failure. Entrepreneurs need to assess and mitigate industry experts and seek advice from
risks effectively. mentors to make informed decisions.

4. Resource Constraints: Limited access to = Leverage partnerships and

resources, including skilled personnel, technology, collaborations to access necessary
and infrastructure, may limit the implementation resources. Optimize resource utilization
of business objectives. Entrepreneurs must through efficient processes and consider
develop new methods to make the most of given outsourcing non-core functions to reduce
resources. costs.

5. Regulatory Challenges: Navigating complicated = Stay informed about relevant

and ever-changing rules and compliance standards regulations and seek legal counsel when
may be time-consuming and expensive. needed. Establish compliance procedures
Entrepreneurs need to keep educated and respond and maintain meticulous records to
to legal and regulatory developments. ensure adherence to all requirements.

6. Work-Life Balance: The demands of business = Prioritize time management and set
frequently eliminate the barriers between work clear boundaries between work and
and personal life. Maintaining a good work-life personal life. Delegate tasks, hire
balance may be tough but is vital for overall well- additional support, or consider
being. implementing flexible work
arrangements.

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 7. Marketing and Customer Acquisition: = Develop a complete marketing plan
Attracting and retaining customers can be a that corresponds with your target
significant hurdle, especially for startups with demographic. Utilize digital marketing,
limited marketing budgets. Effective marketing social media, and content marketing to
and customer relationship management are vital. reach prospective consumers. Focus on
creating great client connections and
giving outstanding customer service.

8. Scaling Challenges: Scaling a business from a = Plan for scalability from the outset by
small startup to a larger enterprise comes with its investing in scalable technologies and
own set of challenges. Managing growth, infrastructure. Maintain a strong
maintaining quality, and preserving the company’s company culture by involving employees
culture are considerations entrepreneurs face. in decision-making and fostering open
communication

9. Innovation and Adaptation: The business = Foster a culture of innovation within

environment is continually evolving. the organization. Continuously monitor
Entrepreneurs must stay innovative and adaptable industry trends and gather customer
to address changing market trends and consumer feedback to identify opportunities for
preferences. innovation. Be flexible in adjusting to
shifting market circumstances.

Qualities to Become a Successful Entrepreneur

Successful entrepreneurs possess a unique set of qualities that drive their achievements in the
competitive business world. Here are the key qualities:

Visionary Thinking: Entrepreneurs have a clear and ambitious vision for their ventures.
Risk-Taking: Entrepreneurship demands the quality to take calculated risks to achieve goals.
Resilience: They bounce back from setbacks and remain persistent.
Adaptability: They adjust to changing market conditions and consumer preferences.
Innovative Mindset: They continually seek creative solutions and opportunities.
Leadership Skills: They inspire and lead their teams effectively.
Customer Focus: They emphasize understanding and addressing the needs of customers.
Financial Savvy: They manage finances wisely and plan for sustainability.
Networking Abilities: They build valuable connections and partnerships
Time Management: Entrepreneurship requires the ability to allocate time and resources
efficiently.

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