Employability Skills Unit – IV

ENTREPRENEURIAL SKILLS
Ch -1
Qualities of Entrepreneur
What is an Entrepreneur?
An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of
the rewards.
Entrepreneurs are all around us. The entrepreneur is commonly seen as an innovator, a source of new ideas,
goods, services, and business/or procedures.
Entrepreneur finds the gap between the customer and market, that is he identifies the unmet demand of
customer and work to fulfill their needs in a best possible manner.
QUALITIES AND CHARACTERISTICS OF A SUCCESSFUL ENTREPRENEUR
1. Leadership: An entrepreneur is essentially a leader. An entrepreneur must have all universally
accepted qualities of a leader, i.e., initiative, high energy level, self-confidence, human relations
skills, motivational skills, creativity and keen desire to solve problems.
2. Risk-taking: Business risks are unpredictable but still an entrepreneur, with rational planning and
firm decisions bears the risks.
3. Innovativeness: Customer's requirements and tastes keep on changing, therefore, production should
meet the customer's requirements. Thus, innovativeness is another important characteristic of an
entrepreneur.
4. Goal-oriented: Entrepreneur is goal-oriented. First he sets a goal to achieve, i.e., to earn profit by
producing goods and services and after reaching one goal he proceeds to another goal.
5. Decision-maker: Entrepreneur is regarded as decision-maker. He has to take many decisions to put
his business idea into reality. He recognises an idea i.e., a product, service or market and out of
various alternatives before time he has to make a choice between them.
6. Highly-optimistic: A successful entrepreneur is always optimistic and is not disturbed by the
present problems faced by him. He is always optimistic that the situation will become favourable for
business in future.
7. Motivator: An entrepreneur has to get the work done through others. He has to create a spirit of
team work and motivate them so that he gets their wholehearted cooperation.
8. Self-confident: An entrepreneur should have self-confidence in achieving his goals, otherwise he
will not be able to convince his fellow beings to achieve his goals.
9. Action-oriented: A real entrepreneur is always action-oriented. Entrepreneur is both planner and
doer, dreamer and achiever. He implements what he visualises.
10. High achiever: The most important characteristic of an entrepreneur is his achievement motivation.
He has
a strong urge to achieve.
11. Self-Starter: Entrepreneurs are aware that if something needs to be done, they need to do it
themselves. They set the parameters to achieve their objectives. They are proactive in their work and
approach.
12. Open-Minded: Entrepreneurs realise that every event and situation is a business opportunity. Ideas
are continuously generated about workflows, efficiency, people skills, and potential new business.
13. Competitive: Successful entrepreneurs are fiercely competitive by nature and utilise opportunities
to establish a service that is better than the rest.
14. Determination: Successful entrepreneurs believe that all things are possible. Failures do not stop
them. Instead, they look at defeat as an opportunity for success.
15. Strong People Skills: Successful entrepreneurs have strong communication skills. Good people
skills also include problem-solving abilities, empathy for others, and a willingness to work together
 towards the common welfare. Successful entrepreneurs motivate their employees and ensure
maximum productivity.
16. Strong Work Ethics: The successful entrepreneurs display strong ethical qualities at their
workplace. They are a role model for work ethics and inspire all their employees to showcase the
same.
17. Passion: Entrepreneurs are not motivated by profit alone. Building a business takes a lot of time
and effort. The entrepreneurs love what they do, and this acts as their biggest motivation to put in all
their efforts into their business venture.
18. Disciplined: Successful entrepreneurs eliminate any distraction that might stop them from achieving
their goals. They plan strategies and outline tactics to accomplish them. They have a disciplined
approach to their work and take steps every day towards achievement of their objectives.

FUNCTIONS OF AN ENTREPRENEUR
The various functions of an entrepreneur may be classified and described as under:
1. Innovation: It includes
(a) Introducing new products, (b) Opening new markets,
(c) News of raw material, and (d) New organisation structure.
2. Risk-taking: Choosing one among various alternatives, the end results of which are unpredictable.
3. Decision making: Includes:
(a) Stabilising organisation's aims and objectives and changing according to changing conditions or to make
them more profitable,
(b) Division of work subordinates, (c) Utilisation of financial resources,
(d) Taking decisions using effective technique (e) Selling the product as per demand of customers,
(f) Relationship with social functionaries
4. Organisation and management: To organise and manage various economic and human phase, Under this
category, following are his functions:
(a) Planning the enterprise, (b) Coordination control,
(c) Supervision and (d) Direction.
5. Size and scale of business unit: To decide about size of business unit, i.e., he wants to establish one
production unit or more etc. which is dependent upon demand of the product. Similarly, he to decide about
scale of production, i.e., small scale, middle scale or large scale.
6. Appointment of managerial and other work force.
7. To arrange for factors of production and establishing coordination, i.e., land, labour, capital etc. in
appropriate proportion and to maximize output by best utilization of these factors a coordinating them.
8. Acquiring raw material and machinery, so that production process is not affected.
9. Control and direction: General policy formulation and exercising control over all departments and
directing them.
10. Finding suitable market: He has to search for suitable market to sell the product, for which he performs
following functions-
a) Advertisement and publicity, (b) Appointment of selling agents
(c) Providing incentives to various selling intermediaries to promote sales.
11. New inventions: Encouraging new inventions and introducing innovations in production, production
techniques, sales, marketing, advertisement etc.
12. Establishing relations with government: To establish relations with government and its functionaries.
In this regards his functions are-
(a) Obtaining licences, (b) Payment of taxes,
(c) Selling the product to government, (d) Provision for export-import etc.
13. Establishing contacts with competitors:
The entrepreneur is in essence an institution which comprises of all people required to perform various
functions. The task of such people is to innovate, adjust or combine various factors of production, and
expand on account of change in demand and market conditions.

1. Coordinating role:- An entrepreneur has to co-ordinate various factors for the production of goods
and services. It also involves selection of the best possible combination of factors. He or she has to
coordinate with the external parties as well as internal parties of his organisations such as employees,
various departments etc.
2. Agents role:- Entrepreneurs are considered as agents of change as they identify the opportunities,
establish enterprises and builds up industries. This in turn leads to overall development of the
economy.
3. Innovators role:- Innovation means doing something new or something different which is a
necessary condition to be called as an entrepreneur. Entrepreneur as innovators bring new products or
services to the market or improve existing product or services for their customers. Innovation in the
industry results in higher production efficiency which lead to an increase in employment and income
levels.
4. Risk assumption role:- Starting a new enterprise always involves risk and trying to do something
new and different is also risky. Therefore, an entrepreneur needs to be bold enough to assume the risk
involved in the enterprise. An entrepreneur needs to be a risk taker, not a risk avoider. It is this risk
bearing ability, that enables him or her even if he or she fails in one time or one venture to persist on
and on which, ultimately helps him succeed and contribute to the economy.
5. Imitating role:- In developing nations, entrepreneurs are not the inventors, they usually imitate or
adopt the innovations done by the entrepreneurs of the developed nations. In this process, he/she
adapt the innovation to the local conditions and work towards overcoming the entrepreneurial
challenges.
6. Capital formation role:- Entrepreneur enables the formation of capital for his or her enterprise by
mobilizing his or her idle savings for the purpose of carrying on his or her business. The mobilizing
of wealth in this manner leads to an increase in capital of the company and development of assets.
This helps in carrying on trade and development of the economy.
7. Balancing role:- Entrepreneur provide opportunities for the regional development by setting up
small scale industries in a region. This not only gives employment to the local population but also
contributes to the development of the region. India also needs such decentralized structures to remove
regional imbalances in the economic development.
8. Status transformation role:- Entrepreneur generate employment, income and wealth which in turn
improves the overall standard of the living in the society Improved standard of living leads to
economic development as it reduces the disparity in income.
 9. Employment generation role:- Establishment of business enterprises leads to the generation of
employment opportunities as various human resource professionals are required to run the business
effectively. Thus, entrepreneurship leads to the reduction in an employment level which is major
cause of hindrance in the development of the economy.

IMPORTANCE OF ENTREPRENEURS
Free Market Evolution Efficiency Improvements New Markets New Values
1. Free Market Evolution:- Entrepreneurs are important in a free market to help the market respond to the
change in prices, consumer preferences etc. For example, with the rise in the use of internet, an entrepreneur
may see the potential to set up a new home delivery service which uses an app for consumers to buy. Without
entrepreneur, the markets would become static and will be slow to adapt changes in technology and as well
as trends.
2. Efficiency improvements:- A successful entrepreneur tends to adapt in an established business and
increase their own efficiency. In order to, increase their efficiency entrepreneurs make changes in the
business and also introduce new technologies. Hence, during any major drastic changes in the economy,
entrepreneurs adapt and do not go out of business.
3. New markets:- Entrepreneurs can often 'redefine the rules' of an established industry. They do this by
creating new consumers and new markets for existing products. They also innovate for improving the
products so as to suit the requirements of a new target market.
4. New values:- An entrepreneur is not just about price and profit. An entrepreneur may be motivated to
enter industry to offer more ethical product or provide a service to a community. For example, Anita Roddick
set up a body shop at the time when cosmetics were tested on animals. In this venture, she discouraged
animal testing, which was the trend of that time. It proved a successful business strategy and soon became
the industry standard.
MYTHS OF ENTREPRENEURSHIP
1. Myth: It is easy to start a business:
In reality, starting a successful business is a very difficult and challenging process. The rate of failure of new
ventures is high. Even after a period of seven years, only one third of the enterprises are profitable. However,
it is relatively easy to start a very small business than a large company.
2. Myth: It takes a lot of money is needed to start a new business:
A business can be started with limited money, for example, Infosys Technology was started with only
10,000. In the beginning you can hire space and equipment.
3. Myth: A Startup cannot borrow from banks:
Under various schemes like MUDRA, budding entrepreneurs also can raise loans from banks.
4. Myth: Talent is more important than industry:
The nature of industry an entrepreneur chooses has 1 great effect on success and growth. For example, if you
enter an industry wherein competition is throat or materials are scarce, you may fail.
5. Myth: Most startups are successful:
A large percentage of startups fail. The average profit of an owner managed firm is Rs.20,000 per month. A
very few entrepreneurs earn more than employees.
6. Myth: You have more freedom in entrepreneurship:
An entrepreneur walks, talks, eats and sleeps his/her dream. They do not have the time-bound schedule of an
employee. They also do not have luxury to hire a big team that works for them. They are actively involved in
all processes of their venture so there is no time-bound schedule for them. They have luxury of flexibility but
idea of freedom is a big myth.
7. Myth: Success is quick if we start small:
Size of the start-up in the beginning may make a difference in managing the business but it has nothing to do
with success directly. Success depends on the acceptance of the product in the market and how it is promoted
among masses. The kind of hard work put into this process will also make a big difference but many small
start-ups fail too not because of their size or finance but due to the flaws in the vision of the start-up.
8. Myth: Entrepreneurs are born, not made:
Many people believe that entrepreneurs possess inborn capabilities. However, experts agree that most
entrepreneurs are not born; they learn to become entrepreneurs. Every aspiring entrepreneur should
remember that starting your own business is not an easy decision, and you must understand that it will
change your life many ways.
9. Myth: You have to be young and restless to be an entrepreneur:
You definitely do not have to be young to be a successful entrepreneur. There is no age limit or specific
personality type required to become an entrepreneur. The entrepreneurial journey is open to people of all
ages, backgrounds, and temperaments.
10. Myth: You need a business plan to succeed:
While having a well-thought-out business plan can be beneficial and increase the chances of success. The
importance of a business plan varies depending on the nature and scale of the business, the industry, the
entrepreneur's experience, and the specific goals they want to achieve.
11. Myth: Entrepreneurs are in it for the money:
While financial gain can be a motivating factor for some entrepreneurs, it is not the only reason they pursue
entrepreneurship. Successful entrepreneurs are often driven by a combination of personal passions, a desire
for independence, a need for creative expression, a wish to make a positive impact on society, and various
other intrinsic motivations.

ENTREPRENEURSHIP AS A CAREER OPTION

Entrepreneurship as Career
Until some time ago, most Indian families and youth especially thought of some safe government job or a
lucrative job in the corporate world as a career option. However, the scenario is not the same any more. As
per a survey, about 83% of youth do think of Entrepreneurship as a possible career option. Although the
interest has definitely increased the success rates are still about the same 5 to 6%. So before taking
entrepreneurial plunge, youth asks a question to self – should entrepreneurship be a career choice for me?
A career is a line of work that a person takes for life. There are two ways a person can earn a living.
1. Self-employment 2. Wage employment

Wage employed people are people who work for a person or an organization and get paid for that work.
Self-employed people are those who start businesses to satisfy the needs of people.
A self-employed person who is always trying to make his/her business better by taking risks and trying new
ideas is an entrepreneur.
 ADVANTAGES OF ENTREPRENEURSHIP AS A CAREER
The main advantages of adopting entrepreneurship as a career are as follows:
1. Independence: An entrepreneur is his own boss. He can take all decisions himself. He need not obey
someone.
2. Ambition-Fulfilment: Some people want to convert their original ideas into a new product or service, for
example smart phone, electric vehicle, driver less train, etc.
3. Excitement: Entrepreneurship involves adventure. Some people resign their well paid jobs and launch
their own venture due to excitement.
4. Freedom: Entrepreneurship allows the freedom to try out one's ideas. Freedom seeking people choose
entrepreneurship as a career.
5. Wealth Creation: Successful entrepreneurs create enormous wealth for themselves and their staff.
6. Status: Success in entrepreneurship brings considerable fame and prestige. Narayana Murthy, Sunil
Mittal, Rana Kapoor, Subhash Chandra and other successful entrepreneurs are known all over the world.

DISADVANTAGES OF ENTREPRENEURSHIP AS A CAREER

1. Risk: Entrepreneurship involves considerable risk of loss. Failure can wipe away all the personal savings
and lead to considerable debt-burden.
2. Hard Work: An entrepreneur has to work very hard to make the new business successful. His work
schedule is unpredictable and he has to work late hours. Spouse and children may have to suffer due to his
very busy work schedule.
3. Uncertain Income: No fixed and regular income is available to an entrepreneur. During the startup stage
it may be difficult even to meet household expenses.
4. Problem of Finance: Raising the necessary funds is very difficult for a first generation entrepreneur.
5. Incompetent Staff: A new entrepreneur may not be able to hire and retain qualified and experienced
employees. Administrative burden is heavy and faulty decisions can be very harmful for the business.
ENTREPRENEURSHIP AND SOCIETY
Society means collection of people living together in a community and associate with each other for various
purposes including business.
Society is described as an aggregate of people living together in a community, who associate for various
engagements including business society provides market for products and services provided by the
entrepreneur.
There is a direct relationship between entrepreneurship and society.
Due to the entrepreneurial activities, the society is able to get goods and services.
Society also helps entrepreneur by providing them markets for the sale of their goods and services.
Entrepreneurs run their businesses in a market. The market has people who buy products and services and
people who sell them also. When people are buying and selling from each other, it is helpful for everyone
because everyone involved makes money.
This is how entrepreneurs help in growing the area and society they live in.
Example:
Ramya and Ramu both own plant shops.
Ramu sits at his shop every day. When customers come, he sells to them.
Ramya walks around and gets customers to her shop. She also sells seeds and flowers with her plants.
Ramya is working to do more and grow her business. She has also added a different idea to her business.
So, Ramya is an entrepreneur and Ramu is a businessman.
Positive Impact of Entrepreneurship on Society
 Increases the Economic growth.
 Encourage the development of creativity.
 Raises the levels of innovation and efficiency.
 Create jobs and employment opportunities.
 Solves the problem of society by providing them what they want.

How Entrepreneurs & entrepreneurship contributes to economy?

Entrepreneurship creates wealth: For their startups and entrepreneurial ventures, the entrepreneurs invest
money and also attract funds from investors and lenders. This way, not only money get mobilised, but also
more wealth is generated benefitting the entrepreneurs, lenders, investors and employees of the venture.
Contribute to the growth of overall economy by stimulating the growth of related businesses: They
stimulate the growth of related businesses and sectors that support their own business e.g., with the boom in
IT companies especially software development, the other associated industries like call-center operations,
network maintenance companies, hardware companies etc. also flourished.
Regional development: Entrepreneurs are encouraged by way of various benefits and concessions to set up
their infrastructure in less developed and backward areas. This promotes growth in infrastructure like roads,
rail links, better electricity and water supply, schools, hospitals etc.
GDP and per capita income: The micro, small and medium scale enterprises account for 37% of country's
GDP and employs more than 8 crore people contributing to increase in per capita income. Any new addition
to these enterprises will utilize more resources like land, labour and capital; and in turn will develop new
products and services.
Exports: A growing business will look towards expansion to foreign markets through exports. This helps
build and use of latest technology and processes to comply with global standards. It leads to currency inflow
and more stable business revenues even when downs are observed.
A person who becomes an entrepreneur goes through a career process. This process is as follows:

ENTER
When an entrepreneur is starting, they are just entering the market to do business.
For example, Sanjana is starting a small grocery store in a locality.

SURVIVE
There are many entrepreneurs in the market. The entrepreneur has to remain in a competitive market.

For example, there are many other grocery stores in the area. Yet, Sanjana’s store survives the competition
and does well. She also expands the store to two more floors.

GROW
Once the business is stable, an entrepreneur thinks about expanding his or her business.
For example, after five years, Sanjana has opened a chain of four more grocery stores in the same city. In the
next two years, she plans to expand to other cities.

FINANCING OPTIONS FOR STARTUPS

So you have decided to be an entrepreneur. You have a vision and a business plan ready too. Now what next?
You need to get funds for your startup. To finance your startup, there are many different ways:
(i) Equity Financing
(ii) Debt financing
(iii) Governmental Grant and support
(i) Equity Financing
This means raising finance in your startup against a share of equity. That is, you get funds but lose some
equity and the one who is funding becomes co-owner of your startup having share in total equity, e.g., if Tata
have invested in your startup against 40% share of your equity - this means now Tata group is owner of 40%
share of your company and you are now left with 60% of the equity.
(ii) Debt Financing
This is the way of raising finance for your startup through debts from different financial institutes.
(i) Loan from Banks and NBFCs. Banks and Non-Banking Financing Companies (NBFCs) grant loans for
startups against the fulfillment of some rules.
(ii) External Commercial Borrowings. Funds can also be obtained from non-resident lenders commonly
called as External Commercial Borrowings (ECB).
(iii) Venture Debt. It is a type of debt financing provided to venture-backed companies by specialized banks
or non-bank lenders to fund working capital or capital expenses, such as purchasing equipment.
There are some other Unconventional modes of financing options which are now becoming popular in India
such as Crowd funding, approaching incubators etc.
(iii) Government Grant and Support
If you have some investment ready and you do not want maximum funding then you can go for grants and
loans available through different government schemes, such as Startup India scheme.
Startup India Scheme is an initiative of the Indian government, the primary objective of which is the
promotion of startups, generation of employment, and wealth creation. It was launched on the 16th of
January, 2016 by Prime Minister Narendra Modi.