Key points of entrepreneurship
Entrepreneurship is defined by results and not by attributes. It is a passion and all about commercial risks.
How many Senses does an entrepreneur have? Is he born with these?
A true entrepreneur uses not only his/her senses one to five, but six, seven, eight and nine. Six to nine do not really exist, but he/she develops them through his/her exposure, experience, failures and following the concept of listening to understanding.
Evolution of Entrepreneurship
Entrepreneurship (starting and running a business) has changed over time.
In the past, people saw business differently based on what was happening in the world economy at that time. Earlier Entrepreneurship used to be Product Centric But now its more Idea centric.
Product Centric Business– Product centric business create or sell a specific product, and the business revolves around making, selling, and improving that product. The aim is to create the best product and sell it to as many customers as possible. Example: Think of a company that makes and sells smartwatch. The business is all about improving the smartwatch, its features, design, and how well it works.
Idea-Centric Business- Instead of just making a product, the Idea centric business is driven by a unique idea that solves a problem or fulfills a need. The idea can lead to creating many products or services over time. The goal is to continuously innovate and create new solutions based on a core idea, which might lead to new products or services in the future. Example: Think of a company like Uber. The idea was to make transportation easier and more affordable through a ride-sharing app. Uber didn’t just focus on one car or service, but on the entire idea of changing how we travel.
Accordingly, a wide range of small and mid-sized businesses have emerged and gained popularity with the affluent middle class, determined to spend more, as well as derive value out of every rupee spent.
The Concept of Entrepreneurship, Entrepreneur and Enterprise.
Origin of word Entrepreneur- The word „entrepreneur‟ is derived from the French word „entreprendre‟ which means „to undertake‟ i.e. individuals who undertake the risk of a new enterprise. The word was coined by Richard Cantillon, an Irishman, living in France.
Definition- An entrepreneur is a person who starts an enterprise and converts a situation into opportunity. He/she searches for change and responds to it.
Different experts have different views about what an entrepreneur is:
Economists say entrepreneurs are like the fourth important factor needed to run a business—along with land, labor, and money (capital).
Sociologists believe that some communities or cultures encourage people to become entrepreneurs. For example, in India, some communities (Marwadis, Gujratis etc.) are known to be naturally good at business.
Features/ Characteristics of an Entrepreneur
Develops and owns his own enterprise;
The entrepreneur starts and runs their own business. It’s their idea, and they are in charge.
Is a moderate risk taker and works under uncertainty for achieving the goal.
They are not afraid of taking risks, but they don’t take foolish risks. They work even when the future is uncertain. they always look for new and better ways to do things.
Is innovative- they always look for new and better ways to do things.
Is a persuader of deviant pursuits- They convince people to try new or different things, even if those ideas seem unusual or risky at first.
Reflects a strong urge to be independent- They like to work for themselves, make their own decisions, and not depend on others.
Persistently tries to do something better- They are always trying to improve—whether it’s a product, service, or way of working.
Is dissatisfied with routine activities- They don’t like doing the same thing every day. They want variety and challenge.
Is prepared to withstand the hard life- They are ready to face difficult situations, long hours, and stress to reach their goals.
Is determined, but patient- They have a strong will to succeed, but they also understand that success takes time and they don’t give up easily.
Exhibits a sense of leadership- They know how to guide and motivate others, and take charge of the team or business.
Exhibits a sense of competitiveness- They want to do better than others and stay ahead in business.
Takes personal responsibility- If something goes wrong, they don’t blame others. They own up and take action to fix it.
Is oriented towards the future- They always think ahead and plan for long-term goals, not just short-term success.
Tends to persist in the face of adversity- Even when things get tough, they don’t give up. They keep trying until they succeed.
Definition of Entrepreneurship- Entrepreneurship may be defined as a systematic innovation which consists of the purposeful and organised search for changes, and a systematic analysis of the opportunities that such change might offer for economic and social transformation.
Definition of Enterprise- An enterprise is the business organization that is formed and which provides goods and services, creates jobs, contributes to national income, exports and contributes to the overall economic development.
Difference between Entrepreneur and Entrepreneurship
| Basis | Entrepreneur | Entrepreneurship |
| Meaning | A person who starts and runs a business | The process or activities involved in starting and running a business |
| Nature | An individual or a group of individuals | A concept or process |
| Function | Creates and leads a new business | The act of creating, managing, and growing the business |
| Goal | To bring about change and growth | To create value and achieve long-term success |
| Example | A person like Elon Musk, who starts innovative ventures | The activities involved in launching SpaceX, Tesla, or a new startup |
Functions of an Entrepreneur
Innovation: The basic function of an entrepreneur is to be an innovator—someone who brings new ideas into business. Innovation does not only mean creating or inventing something new but it may also mean doing same things in different manner too. Entrepreneurs do things like Create new products, Find new ways to make things, Discover new markets to sell their products, Use new raw materials or resources. An entrepreneur sees a chance to make profit and tries to take advantage of it by doing something new or better. Example: I-Pod, Smart phones, Induction cook top etc.
Risk-taking: Risk taking refers to taking responsibility for a loss that may occur due to unforeseen circumstances in the future. An entrepreneur not only takes the risk but also takes the measures to reduce the risk of uncertainty. An entrepreneur is usually Confident, Positive and Willing to take risks to try new ideas or grow the business. Eg. Dhirubhai ambani took the risk of investing money on barren land and produced alphonso mangoes.
Organisation Building: Organisation and management are the main functions of an entrepreneur. An entrepreneur organises the resources like land, labour , capital and also manages /allocates the resources in such a manner that there is minimum wastage and least cost. All decisions relating to an enterprise is taken by the entrepreneur. He/she alone determines the lines of business to expand and capital to employ. Thus, an entrepreneur is the final judge in the conduct of his/her business.
Promotional functions (Learn in the same sequence)
Discovery of an idea: An entrepreneur sees a business opportunity and believes it can make a profit. The idea might be to use natural resources in a new way, to start a more profitable business or to improve an existing business. The entrepreneur then discusses the idea with experts and after their guidance the entrepreneur does detailed planning before starting. Eg, In case study of Nirma, Karsan Bhai Patel identifies the need and the problem of the society that could not afford other brands of detergent powders because of their high cost so he came up with the idea to manufacture Low cost but effective washing powder NIRMA.
Detailed Investigation: After discovering the idea, the entrepreneur first tries to estimate how many people will want to buy the product. This helps him understand the possible demand for his product. Based on this, he decides how much money he will need and how to arrange it. He also plans for other resources like power, workers, raw materials, etc. Eg, Karsanbhai Patel of Nirma didn’t just guess—he studied the market, tested his idea, and then expanded. That is how he did a detailed investigation before building Nirma into a big brand.
Assembling the Requirements: Once the entrepreneur is sure that the idea is practical and can make profit, he starts gathering everything needed to start the business. He asks other people to join and help. If the idea is new or invented, he may need to get legal rights (patents).He chooses a place to set up the factory, decides on machines, and talks to suppliers for raw materials. Then, he signs some early agreements, and the project is ready to begin. Eg. Karsanbhai Patel arranged resources in a smart and simple way like Used His Kitchen as a Factory, He bought basic ingredients needed to make the detergent using his own income, in the beginning, he packed the detergent himself.
Financing the Proposition: The entrepreneur plans how much money the business will need. First, he estimates the total amount of money required. Then, he decides where the money will come from. He also plans for both long-term (for many years) and short-term (for a few months or a year) needs.He chooses the type of money source—like shares, loans, or debentures. Eg. Karsanbhai Patel raised finance through self-funding.
He started small, spent wisely, and reinvested profits to grow the business over time. For example, when Narayana Murthy started Infosys in 1981, he had no capital and his wife Sudha Murthy gave him Rs. 10,000/- which she had saved for a rainy day.
Managerial functions (Learn in the same sequence)
Planning: It is the basic managerial function of an entrepreneur. It means thinking ahead and deciding in advance What to do , When to do it ,How to do it and Who will do it. Planning helps the entrepreneur choose the right steps to reach business goals. It all starts in the mind of the entrepreneur as clear thinking and smart decisions.
Organising; Every business needs many people to handle different types of work. The entrepreneur sets the goals for these people to achieve. Under the organising function, an entrepreneur arranges the factors of production and creates jobs by clarifying who will work under whom.
Staffing: After creating jobs in the organising function, these positions are filled through the staffing function by hiring the right people for the business. Staffing process includes planning how many people are needed, Finding and selecting the right workers, training and developing employees, promoting or transferring them, checking their performance and deciding their salary or wages.
Directing: Directing means initiating action or putting plans into action. The entrepreneur guides and manages the team so that everyone works well together to achieve the goals. Under directing function an entrepreneur performs these activities mainly called as four elements of directing – Leadership, communication, Motivation and supervision.
Leadership: Leadership is when the entrepreneur guides, supports, and motivates others to reach a goal. A good leader makes sure both the employees and the business are happy and successful.
Communication: Communication means sharing ideas, information, and feelings between people. It is very important in business. Entrepreneurs spend most of their time talking, listening, and explaining. Without good communication, nothing can be managed well.
Motivation: Motivation is about encouraging people to do their best. It helps workers stay interested and perform better. Good motivation should meet the worker’s needs like respect, safety, money, and job satisfaction.
Supervision: Super means over and vision means see , so after giving instructions, the entrepreneur must watch and guide the workers. Supervision makes sure that the work is done correctly ,resources are used properly and mistakes are fixed quickly.
Controlling – Controlling means checking if the work is going as planned.
It includes setting performance goals, measuring actual work done, comparing results with the goal, finding mistakes and taking action to improve the identified mistakes or errors. This helps the entrepreneur make sure everything is on track and the business is working properly.
Co-ordination: Coordination is called the essence of management . As its needed while performing all above functions of management. Co-ordination means making sure everyone in the business works together smoothly to reach the same goal. The entrepreneur checks that all departments are working as planned. If something goes wrong, they take steps to fix the problem.
Commercial Functions of an Entrepreneur
Production: Production is one of the main jobs of an entrepreneur. It means making goods or providing services. Whether the business is small or large, production is always important. In a small business, one person may handle it. In a big company, many people or teams may do it. It includes making products, supporting activities, and even giving advice related to production.
Finance: Money is very important for every business.
A business always needs money, starting from when it is set up and all through its growth. As the business grows, it needs even more money. It is the entrepreneur’s job to find different sources of money and arrange the funds whenever needed.
Marketing: Marketing is all about getting goods and services from the maker to the customer. Its main goal is to make customers happy by meeting their needs. Marketing helps the business grow and succeed. The entrepreneur’s job is to plan smartly so the business becomes the best in the market.
Personnel: This is about hiring people, helping them grow, paying them fairly, and making sure they have good working conditions and benefits. It helps keep workers happy and motivated.
Accounting: This means keeping track of all money matters in the business. The entrepreneur records all financial activities to know how much money the business has and how it is being spent.
| Why entrepreneur is considered an agent of progress in the society? An entrepreneur is an agent of progress in society because they create new jobs, introduce useful products, and bring new ideas that solve everyday problems. By starting and growing businesses, entrepreneurs help the economy develop and improve people’s quality of life. For example, Karsanbhai Patel, who created Nirma washing powder, saw that many people could not afford expensive detergents. By making an affordable product, he helped millions of families clean their clothes easily while also creating jobs and building a successful business. Entrepreneurs like him bring positive changes that help society grow and improve. |
Need For Entrepreneurship
Life-line of a nation: A country cannot grow or become successful without entrepreneurship. Every country tries to encourage businesses to trade and grow so that everyone can benefit. So entrepreneurship is the yardstick to measure the level of development of a country. For example, countries like China and India have focused on supporting entrepreneurs to help their economies develop and improve people’s lives.
Provides innovation: Entrepreneurs bring new ideas and creativity to business. They find new technologies, create new products, and explore new markets. By doing this, they help use resources better and help the economy grow. For example, Elon Musk invented electric cars with Tesla, which changed the car industry and made it more eco-friendly.
Change and growth / Inclusive growth: Businesses face constant changes, like new technology and customer needs. Entrepreneurs help their businesses adapt to these changes and also change the environment to succeed. For example, when smartphones became popular, entrepreneurs started creating new apps and services to meet new demands, helping both their business and the market grow.
Increased profits: A business can make more profit by selling more or by spending less. Since selling more is often hard to control, entrepreneurs focus on cutting costs to earn more money. For example, a factory owner might use better machines to save electricity and materials, which lowers costs and increases profits.
Employment opportunities: Entrepreneurship creates jobs for many people. When entrepreneurs start new businesses, they need workers to help run them. As these businesses grow, they give jobs to even more people.Example: When Karsanbhai Patel started Nirma, he began alone, but as the company grew, he hired many workers for making, packing, and selling the detergent, creating jobs for thousands.
Social Benefits: Entrepreneurship doesn’t just help businesses—it also helps society. It improves people’s lives by offering good-quality products at low prices. It also uses resources wisely and helps create a better, more peaceful society. Example: Nirma washing powder was affordable and helped poor and middle-class families keep their clothes clean. This improved their standard of living and showed how a business can benefit many people.
Myths of Entrepreneurship;
According to Guy Kawasaki, many entrepreneurs believe a set of myths about entrepreneurship, the most common being:
Starting a business is easy – It’s a Myth:
Starting a business may seem easy, but in reality, it’s quite difficult. Many people try, but most don’t succeed in actually running a successful business. Research shows that after 7 years, only about one-third of new business starters have a company that earns more than their personal costs for even 3 months in a row. However, small businesses are a bit easier to start and manage. Example: Someone opening a small food stall might find it easier to start than someone opening a big restaurant, but even that requires planning, money, and hard work to succeed.
It takes a lot of money to start a business – Not always:
Many people think starting a business needs a lot of money, but that’s not always true. Most new businesses can start with around ₹1,50,000. Smart entrepreneurs keep costs low by renting instead of buying and paying commissions instead of fixed salaries.
Example: Infosys, one of India’s biggest IT companies, was started with just ₹10,000.
Start-ups can’t be financed with debt – It’s a Myth:
Many people think new businesses can’t take loans, but in fact, most start-ups use loans (debt) more than investor money (equity). Entrepreneurs often borrow money to get started, especially when they don’t have outside investors. They just need to plan how much to borrow and how much money to raise in other ways. Example: Lijjat Papad started in 1959 with just ₹80 borrowed by seven women in Mumbai. They used this small loan to buy ingredients and start making papads at home. Over time, the business grew into a huge women’s cooperative without taking outside investments.
Banks don’t lend money to start-ups – It’s a Myth:
Many people believe banks don’t give loans to new businesses, but that’s a myth. Banks and government schemes do provide loans to help new entrepreneurs start their businesses. You just need a good business plan and proper documents. Example: Under the Mudra Loan Scheme, many small business owners in India have received loans to start or grow their ventures.
Most entrepreneurs start businesses in attractive industries –MYTH
Many entrepreneurs choose popular or “trendy” industries to start their business. But studies show that these are often the industries where most businesses fail, because there is too much competition. So not always all entrepreneurs start their business in attractive industry some take the risk of following their passion irrespective of industry. Example:Mahima Mehra, instead of entering a popular industry, started Hathi Chaap, a unique business that made handmade paper from elephant dung. She tried different materials, did a lot of research, and found that elephant dung had more fibre, which was perfect for paper-making. Her success came from doing something different, not something popular.
The growth of a start-up depends more on talent than the business idea – Not completely true/ partially true
Even if an entrepreneur is talented, choosing the right industry matters a lot. A growing industry gives more chances for success, while a declining one makes it harder to survive. Example: Kunal Shah, the founder of Freecharge, entered the digital payment industry at a time when online transactions were rapidly growing in India. His success was not just due to his skills, but also because he chose the right industry at the right time, when digital payments were in high demand.
Most businesses make a lot of money – This is a myth:
Entrepreneurship can create wealth, but not everyone becomes rich. Many small business owners earn modest profits, sometimes even less than they would if they worked for someone else. Only a few top entrepreneurs make big money. Example: Take Dhirubhai Ambani, who started Reliance with very little but built it into a huge company and became very rich. However, most small business owners don’t reach this level and earn much less than big entrepreneurs like him.
Advantages and Disadvantages of Entrepreneurship
Advantages of Entrepreneurship
Excitement:Starting a business involves taking risks, which makes it exciting and adventurous. Example: Steve Jobs left Apple to start Pixar, a risky move that later became very successful.
Originality:Some entrepreneurs want to create new products or services that no one else has before.Example: Steve Jobs introduced original products like the iPod and iPad, which were new and different in the market.
Independence: Some people want to be their own boss and make their own decisions.Example: Ratan Tata started Tata Group with a vision to lead and make key decisions independently.
Rational Salary: Some people feel they don’t get paid enough for their work, so they start their own business to earn what they deserve. Example:
Dhirubhai Ambani started Reliance Industries because he wanted to build something on his own and earn according to his efforts.
Freedom:
Entrepreneurs can choose to work on any idea they believe in and want to develop. They don’t need to take anybody’s permission before implementing their good or weird ideas. Example: Elon Musk used his freedom to create companies like Tesla and SpaceX, working on electric cars and space travel.
Disadvantages of Entrepreneurship
Salary: Starting your own business means you might not get a steady paycheck like a regular job. Example: Kiran Mazumdar-Shaw, founder of Biocon, took the risk of leaving a secure job to start her own company. At first, she didn’t have a regular salary, but she believed in her business and worked hard to make it successful.
Work Schedule:An entrepreneur’s work hours are often unpredictable. They may have to work late or handle emergencies at any time.An entrepreneur’s job is 24X7. Example: Elon Musk is known for his long and irregular work hours, often working 80-100 hours a week to manage Tesla and SpaceX, showing how unpredictable an entrepreneur’s schedule can be.
Administration: The entrepreneur has to make all the important decisions alone. There’s no boss above them, so the pressure of making the right choice can be stressful. Example: Dhirubhai Ambani had to make many tough decisions when building Reliance Industries, showing how entrepreneurs carry the weight of responsibility alone.
Incompetent staff:
Often, entrepreneurs work with employees who don’t have as much experience or skill as they do, which can make managing the business harder. Example: When Kiran Mazumdar-Shaw started Biocon, she faced challenges with inexperienced staff but worked hard to train and build a strong team.
Process of Entrepreneurship (Learn in the same sequence)
Shallu Sood – PGT(COMMERCE & ENTREPRENEURSHIP)
EXP. 23 YRS.
M.COM., M.A. (Economics), B.Ed.
CERTIFICATION IN DESIGN THINKING , IIT DELHI
GOOGLE CERTIFIED EDUCATOR