Entrepreneurship and small business management

F010502T

Unit 1

Concept of Entrepreneurship
Entrepreneurship is the ability and readiness to develop, organize and run a business
enterprise, along with any of its uncertainties in order to make a profit. The most
prominent example of entrepreneurship is the starting of new businesses.

In economics, entrepreneurship connected with land, labour, natural resources and

capital can generate a profit. The entrepreneurial vision is defined by discovery and
risk-taking and is an indispensable part of a nation’s capacity to succeed in an ever-
changing and more competitive global marketplace.

Entrepreneurship is the process of a person or group of people who create a

new business on their own. They're responsible for the rewards and challenges
that come with being an entrepreneur. There are small and large scales of
entrepreneurship, such as creating a small business or introducing a brand new
product or service to the market.

Entrepreneurship entails bearing the risk of buying at a certain price and selling at
uncertain prices.”- Ricardo Cantillon.

The concept focuses on the trading of goods and bearing its associated risk as to the
act of entrepreneurship.

“Entrepreneurship is any kind of innovative function that could have a bearing on the
welfare of an entrepreneur.”-Joseph A. Schumpeter (1934).

Schumpeter recognizes entrepreneurship as a rewarding activity that involves any

form of innovation. Innovation is doing things in a new and better way. It adds utility
to existing operations or products.
“Entrepreneurship is that form of social decision-making performed by economic
innovators.” -Robert K. Lamb (1952).

Meaning of Entrepreneur

The entrepreneur is defined as someone who has the ability and desire to establish,
administer and succeed in a startup venture along with risk entitled to it, to make
profits. The best example of entrepreneurship is the starting of a new business venture.
The entrepreneurs are often known as a source of new ideas or innovators, and bring
new ideas in the market by replacing old with a new invention.

let us now consider some definitions to understand who an entrepreneur is:

(i) According to Oxford Dictionary an entrepreneur is “A person who sets up a

business or businesses, taking on financial risks in the hope of profit”.

(ii) According to the International Encyclopaedia, an entrepreneur is “An

individual who bears the risk of operating a business in the face of uncertainty about
the future conditions”.

(iii) Schumpeter’s Definition – The entrepreneur, in an advanced economy is an

individual who introduces something new in the economy – a method of production
not yet tested by experience in the branch of manufacturing, a product with which
consumers are not yet familiar, a new source of raw material or of new markets and
the like”.

(iv) Adam Smith’s definition – “The entrepreneur is an individual, who forms an

organization for commercial purpose. She/he is proprietary capitalist, a supplier of
capital and at the same time a manager who intervenes between the labour and the
consumer. “Entrepreneur is an employer, master, merchant but explicitly
considered as a capitalist”.

(v) Peter F. Drucker’s Views on Entrepreneur – “An entrepreneur is the one who
always searches for change, responds to it and exploits it as an opportunity.
Innovation is the specific tool of entrepreneurs, the means by which they exploit
changes as an opportunity for a different business or different service”.

(vi) In the 20th century the theorist Arthur H. Cole defined an entrepreneur as
an ‘organization builder’.
History of the term ‘Entrepreneur’

The term entrepreneur is a French word, and is derived from the French word
“enterprendre”. It means “to undertake”. It is commonly used to describe an
individual who organizes and operates a business or businesses, taking on financial
risk to do so.

Importance of Entrepreneurship

Entrepreneurship is very important not only for individuals but also for the whole
economy. It helps in increasing the GDP of a country and also improves the Human
Development Index (HDI). It promotes technology and modernization in the country.
Some of the vital roles played by entrepreneurship are as follows:

o Creation of Employment
One of the major importance of entrepreneurship is the creation of job
opportunities in the economy. It helps the un-experienced and fresher to get
an entry-level job not only to improve their resume but also to get experience,
training, and skills.
o Innovation
Entrepreneurship supports innovative ideas and plans. It provides new
product ventures, technology, services, market, etc. to the society which led to
the development of a nation and increases the standard of living. The
innovation saves time, money, and resources.
o Impact on Society
The large and diversified employment opportunities led to the development of
society. It supports the livelihood of the society with higher expenditure
on education, health, and sanitization, fewer slums, reduced poverty,
etc. In short, entrepreneurship takes a company towards a high quality of
community life.
o Increase Standard of Living
By providing employment opportunities and increasing income,
entrepreneurship helps in improving the standard of living of a person. Here,
the standard of living means, more consumption of goods and services by an
individual or household for the betterment of life.
o Supports Research and Development
Before launching a new product or service into the market, it is must to
 do proper research and testing to avoid any market uncertainty. For this
purpose, the entrepreneur discharges finance to research institutions and
universities which further helps in the promotion of research, general
construction, and development in the economy of a country.

Role of Entrepreneurship in Economic Development

The role of entrepreneurship in economic development has nine salient

takeaways:

1. Raises Standard of Living

A significant role of entrepreneurship in economic development is that it can greatly

enhance the standard of living for individuals and communities by setting up
industries and creating wealth and new positions. Entrepreneurship not only provides
large-scale employment and ways to generate income, it also has the potential to
improve the quality of individual life by developing products and services that are
affordable, safe to use, and add value to their lives. Entrepreneurship also introduces
new products and services that remove the scarcity of essential commodities.

2. Economic Independence

Entrepreneurship can be a path to economic independence for both the country and the
entrepreneur. It reduces the nation’s dependence on imported goods and services and
promotes self-reliance. The manufactured goods and services can also be exported to
foreign markets, leading to expansion, self-reliance, currency inflow, and economic
independence. Similarly, entrepreneurs get complete control over their financial
future. Through their hard work and innovation, they generate income and create
wealth, allowing them to achieve economic independence and financial security.

3. Benefits of New Firms and Businesses

Entrepreneurs identify market needs and develop solutions through their products and
services to begin their business venture. By starting new firms and businesses,
entrepreneurs play a key role in shaping the economy and creating a more dynamic
and diverse business landscape. Entrepreneurship also promotes innovation and
competition, leading to new and improved products and services that contribute to
economic growth and development.

4. Creation of Jobs

Entrepreneurship is a pivotal driver of job creation. Running the operations of new

businesses and meeting the requirements of customers results in new work
opportunities. Entrepreneurship also drives innovation and competition that
encourages other entrepreneurs and investments, creating new jobs in a wide range of
industries, from manufacturing and construction to service and technology sectors.

5. Encourages Capital Formation

Capital formation is the process of accumulating resources, such as savings and

investments, to fund new business ventures and support economic growth.
Entrepreneurship can encourage capital formation by attracting investment. In
addition, the creation of new businesses and the growth of existing firms can also
contribute to the development of a more diverse and dynamic economy that
encourages capital formation and opens the door to a wide range of investment
opportunities.

6. Elimination of Poverty

Entrepreneurship has the potential to lift people out of poverty by generating

employment and stimulating economic activity. Entrepreneurship also contributes to
the development of local economies and helps improve the overall standard of living.

7. Community Development

Entrepreneurship promotes economic growth, provides access to goods and services,

and improves the overall standard of living. Many entrepreneurs also make a positive
impact on their communities and improve their well-being by catering to underserved
areas and developing environment-friendly products. Their work can help build
stronger, more vibrant communities and promote social and economic development.

8. Optimal Use of Resources

Entrepreneurship can help identify market opportunities and allocate resources in the
most effective way possible. Entrepreneurs also play a key role in developing
innovative products and services that meet the needs of customers while optimizing
the use of available resources.

9. Increases Gross National Product and Per Capita Income

Entrepreneurship can play a significant role in increasing economic growth and

prosperity by increasing Gross National Product (GNP) and Per Capita Income (PCI).
GNP measures the total economic output of a country while PCI calculates the
average income per person. The increase in GNP can lead to a rise in PCI.
Entrepreneurship can contribute to GNP by creating new businesses and industries,
which can lead to job creation, increased consumer spending, and higher tax revenue.

Barriers to Entrepreneurship

Every entrepreneur establishes a start-up with the aim of making profits and defeating
its competitors. But it is not as easy as it seems. There are lots of issues, problems, or
barriers that can arise and affect the smooth running of the business. Some of the
major barriers to entrepreneurship are as follows:

o Environmental Barriers
The environment has an impact on the entrepreneurs also. They can be related
to the lack of resources or any other effect of nature. Various environmental
barriers are as under:
o Non-availability of raw materials
o Shortage of skilled labors
o Change in technology
o Poor infrastructure
o Natural Calamity
o Financial Constraints
The availability of finance is one of the most common barriers that can affect
entrepreneurship. Poor management, delay in decisions, ineffective &
inefficient personnel, poor performance, etc. led to a delay in the source of
finance.
o Personal Barriers
There are some personal barriers that can leave negative impacts on
entrepreneurship. These barriers are:
o Lack of confidence
o Lack of motivation
o Lack of patience
o Fear of failure
o Inability to dream
o Society Barrier
Sometimes society can also be a hurdle for entrepreneurship. These barriers are
as follows:
 o Entrepreneurial behavior
o Financial instability
o Socio-cultural norms
o Political Barrier

The political party and political conditions also play a major role in the
economy and business of that area. The political barriers include:

o Government's taxation policies

o Government's interest in the economic development
o Government's incentives and concessions

Let us understand each type in detail:

Based on the Business Type

Depending on the type of business, entrepreneurs are classified into the following types:

Trading Entrepreneur

A trading entrepreneur refers to a person who undertakes business-related activities.

These types of entrepreneurs usually buy finished products in bulk from manufacturers
at some discount. They then sell these products directly or with the help of retailers or
vendors with profits. A business entrepreneur usually acts as a middleman between
manufacturers and customers. This may include wholesalers, retailers, dealers, etc.
Manufacturing Entrepreneur

The founder of a business to manufacture products is known as a manufacturing

entrepreneur. Manufacturing entrepreneurs analyze market needs or customer needs and
manufacture products to meet such needs using various resources or technologies. In
simple words, manufacturing entrepreneurs transform raw materials into finished
products according to the customer's needs.

Agricultural Entrepreneur

Agricultural entrepreneurs refer to the types of entrepreneurs who primarily do

agricultural work. They participate in a wide range of agricultural activities such as
farming, irrigation, agricultural produce, mechanization, technology, etc.

Based on the Technology

Based on technology, entrepreneurs are classified into the following types:

Technical Entrepreneur

Such entrepreneurs are called technology entrepreneurs who use to start and continue
industries primarily based on science and technology. These entrepreneurs develop new
ideas and turn those ideas into technology-based innovations and inventions. They
always work to create new methods of production in the fields of technology and
science. Besides, they also manufacture products that can help ordinary citizens and
other non-technical entrepreneurs in their enterprises.

Non-Technical Entrepreneur

As the name suggests, entrepreneurs who do not set up and run enterprises based on
science and technology are known as non-technical entrepreneurs. In short, non-tech
entrepreneurs are those who work for innovations using traditional methods. They
typically use alternative and exemplary marketing methods and follow non-technical
delivery strategies to engage directly with customers. This ultimately helps them to
survive and grow their business in a competitive market. Moreover, they create better
relationships and meet customer needs.

Based on Ownership

Based on ownership, entrepreneurs are classified into the following types:

Private Entrepreneur

When an entrepreneur starts something personal of his or her own, such as setting up
an enterprise, he/she is called a private entrepreneur. A private entrepreneur is the only
person who plays the sole proprietor role for a business venture and bears the risk
associated with it.
State Entrepreneur

When a state or government does a business or industrial undertaking, it is referred to

as a 'state entrepreneur'. In this case, the government is the sole owner of the enterprise
and will bear all the profits and losses involved with it.

Joint Entrepreneurs

When a business or industrial undertaking is established and operated jointly by the

private entrepreneur and the government, it is called joint entrepreneurship. The parties
involved are called joint entrepreneurs. In this case, risk and profits are shared by both
parties. However, the sharing percentages generally depend on the type of business and
the agreement between the two parties.

Based on Gender

Based on gender, entrepreneurs are classified into the following types:

Men Entrepreneurs

When any business venture is formed, managed and operated by men, these men are
referred to as men entrepreneurs.

Women Entrepreneurs

When any business venture is formed, managed and operated by women, these women
are referred to as women entrepreneurs. Besides, if women have a minimum 51 percent
share of the capital, they can also be known as women entrepreneurs.

Based on the Enterprise size

Based on the size of the enterprise, entrepreneurs are classified into the following types:

Small-Scale Entrepreneur

If an entrepreneur has invested up to a maximum of 1 crore in starting an enterprise,

including plant and machinery, such entrepreneur is called Small Scale Entrepreneur.

Medium-Scale Entrepreneur

If an entrepreneur has invested a minimum of 1 crore to a maximum of 5 crores in

starting an enterprise, including plant and machinery, then such entrepreneur is called
Medium Scale Entrepreneur.
Large-Scale Entrepreneur

If an entrepreneur has invested more than 5 crores in starting an enterprise, including

plant and machinery, such an entrepreneur is called a large-scale entrepreneur. This
includes any investment above 5 crores.

Traits of an entrepreneur

Here are the qualities that make an entrepreneur:

1. Self-motivated
Self-motivated describes someone who can motivate themselves rather than relying on
another person. Self-motivated individuals use discipline and passion to complete
essential tasks on time, limiting procrastination and producing results. Entrepreneurs
must have a level of self-motivation to overcome challenges and keep up with their
business practices.

For example, an entrepreneur might use their self-motivation to send out emails to
clients after having a challenging client experience that resulted in a loss of business.

2. Open-minded
Someone open-minded is willing to accept or learn about new ideas and opportunities.
That’s why open-mindedness is such an essential trait for an entrepreneur. If they
remain open to new business opportunities, they could find success in a completely
different way.

For example, an entrepreneur starts a workout-app company wherein gym-goers can

connect with personal trainers. This idea proves unsuccessful, and so they try to start a
social media advertising consultant firm. This business idea helps generate over
$5,000 in revenue during the first two months of operation. Open-mindedness could
mean finding success in an area you didn’t want to consider.
3. Curious
Similar to open-mindedness, entrepreneurs should also have high levels of curiosity.
A curious mind can produce unique and innovative ideas that provide solutions to
save a start-up company.

For example, an entrepreneur creates an online recruiting network that allows

companies and recruitment agencies to connect with qualified job candidates. They
wonder if business would improve by marketing their site toward colleges and
universities with career center services for upcoming graduates. This idea helps
jumpstart site revenue while also creating a primary customer base.

4. Proactive
When an entrepreneur is proactive, they cannot only anticipate change but also take
preemptive measures that help them conquer those changes. For example, a self-
employed HR consultant creates their own online course and eBook to predict a rise in
competition across the industry.

5. Health-conscious
Entrepreneurs tend to lead healthy, balanced lifestyles so they can have the energy to
operate their business ventures. For example, an entrepreneur might make a point to
work out every morning, or they might take a day off to recharge after a long work
week.

6. Creative
Another trait of entrepreneurs is creativity. Regardless of their business’s industry,
they have to come up with new ideas and solutions to guide their company forward.
For example, an entrepreneur comes up with a unique marketing idea where they
record a video series about entrepreneurship to drive traffic to their website.

7. Persuasive
Entrepreneurs should have a level of persuasiveness to convince investors to donate
funds and to persuade customers to buy their products or services. For example, an
entrepreneur prepares a presentation to give to potential investors about their
projections for the company’s growth within the next five years.
8. Brave
Bravery is another entrepreneurial trait from which you can benefit. Entrepreneurs
regularly take risks from the moment they decide to start their business, and they must
have the courage to accept criticism. For example, an entrepreneur puts in their two-
week notice at their nine-to-five job before operating their start-up full-time.

9. Team-oriented
Entrepreneurs might start as sole-proprietors, but with the right business tactics, they
could soon have several employees working under them. That is why it is so crucial
for entrepreneurs to be team-oriented.

For example, an entrepreneur takes on three other employees to help with sales calls
and content creation. They hold daily meetings, listening to their employees’ concerns
and involving them in decisions.

10. Youthful
Regardless of age, entrepreneurs should have a young perspective to keep evolving
their business and combat working odd hours. For example, an entrepreneur spends
the evening after meeting with clients all day to work on a new software application.

11. Humble
Entrepreneurs typically have a humble attitude because they understand the work that
goes into creating and maintaining a successful business and how success can drop.
For example, a successful entrepreneur makes a point to respect others and show
gratitude for their business.

12. Punctual
Another excellent trait for entrepreneurs is showing up early to meetings and events.
For example, an entrepreneur arrives 20 minutes early to a lunch meeting with a
prospective client.
13. Humorous
Humorous entrepreneurs can laugh at their mistakes and move on from them. For
example, when an entrepreneur sends an email addressed to the wrong client, they
remedy the situation by sending a second response before getting back to work.

14. Being a good leader

An entrepreneur is expected to manage a business and most professionals in this

position are responsible for its start-up as well. Typically, entrepreneurship involves
finding and building relationships with investors, overseeing employees and
monitoring operations. To perform these activities well, you need to be an effective
leader.

15. Being optimistic

Optimism can be described as focusing on the positives and being emotionally

resilient to the negatives. An entrepreneur who organizes, manages and operates a
business is likely to face many setbacks over time. For example, as you start your
business, you will need to complete a lot of paperwork concerning licenses, tax forms,
business plans and bank accounts. In the process of getting these documents ready,
there could be many issues that check your progress, such as delays in getting a
license or structural issues in your business plan. Being optimistic can help you to
overcome these problems quickly instead of becoming demotivated by them.

16. Being confident

Confidence is a subjective belief that you have what is needed for something.
Entrepreneurs ask banks for loans, hire workers, motivate teams and build
relationships with clients and suppliers, so it is important for an entrepreneur to be
confident in their ability to do all these things well.

17. Being passionate

Being passionate about building and running your business can make it easier to put in
the effort needed for a successful enterprise.

18.Being disciplined

Being disciplined can help you to achieve success as an entrepreneur. Entrepreneurs

are expected to work independently, set their own goals and overcome setbacks. To do
these things well, being disciplined is essential.

There are four main types of entrepreneurship which include the following:
 1. Small Business Entrepreneurship

It includes all the businesses which are run and operated on a small scale, for
example, grocery store, carpenter, consultant, electrician, travel agent, plumber,
hairdresser, etc. Small businesses are owned by individuals with the help of their
family members or local employees. Their amount of profit is not so high and is enough
to feed their family not to set up a large-scale business. These entrepreneurs invest in
the business by taking small loans from banks, friends, or family.

This type of entrepreneurship is the most common and widely seen worldwide. The
reason for this is that most of the enterprises are small types of businesses. With small
business entrepreneurship, people usually want to earn enough profit to feed their
families and meet their basic needs. This type of entrepreneurship is mostly owned and
operated by an individual unlikely to expand the business on a large scale. In this
entrepreneurship, the business owner usually employs local employees or family
members.
In small business entrepreneurship, businesses such as local grocery stores, tea shops,
plumbers, electricians, barbers, carpenters, consultants, and more are considered.
However, they should not be formed into a nationwide series or franchise by one person.
Entrepreneurs typically invest in small business entrepreneurship using their savings or
small loans from banks, or friends or family.
Characteristics of Small Business Entrepreneurship

The following are some common characteristics of small business entrepreneurship:

o Entrepreneurs focus on a single product, technology, market or localism while
establishing small business entrepreneurship.
o Small business entrepreneurship usually has no expansion plans in the initial
stages of establishment.
o The primary objective of small business entrepreneurship is to generate profits
from the early days of establishment

2. Scalable Startup Entrepreneurship

This entrepreneurship is focused on bringing a positive and big change to the

world. Their prime source of capital is those investors who promote the entrepreneurs
with unique ideas and plans. Such entrepreneurship encourages scalable business and
experimental models so the appointment of the best and most deserving employees
can be done. This research-based model demands more venture capital to run the
business.

Scalable startups are not as popular as small business entrepreneurship. Entrepreneurs

who create this type of entrepreneurship have the idea of making changes in the world.
Although enterprises in scalable startups typically start on a smaller scale, they often
attract plenty of media and other outside investors who work to encourage and support
those who build something different and new. This means that scalable startups
typically receive funding that they use for growth, development, and research. They hire
the best employees and work towards the experimental model.

With money and continued growth, such enterprises become large and popular. Besides,
entrepreneurs work primarily to find things missing in the market and then develop
something new to fill that missing gap. Scalable startup entrepreneurship typically seeks
rapid expansion over time and earns huge profits. Some of the most popular examples
of scalable startup entrepreneurship are Facebook and Instagram.

Characteristics of Scalable Startup Entrepreneurship

o Like small business entrepreneurship, scalable startups are also initially
established as small scale industries. However, entrepreneurs have a vision for
growth and further expansion from day one.
o In scalable startups, entrepreneurs generate revenue rather than just profits and
invest in their enterprises for growth and expansion.
o External investors and venture capitalists fund the most scalable startup
entrepreneurship

3. Large Company Entrepreneurship

These companies are run and operated at a very large scale and have their branches in
different places. They have a defined life-cycle. The main strategy of these companies
is to grow and sustain in the market by offering new and innovative products to the
customers. In most cases, these products are related to their main product. Large
companies are always aware of changes in technology, customer preference, and
taste, new competition, etc. These conditions create pressure on these companies to
use an innovative idea not only to manufacture the products but also to sell them to add
new customers and compete with other sellers. For this purpose, these companies either
buy an innovation enterprise or try to manufacture the products internally.

Enterprises having a fixed set of life-cycles are covered under large company
entrepreneurship. This means that such enterprises are responsible for creating new
products, services or technologies from time to time due to changes in market needs and
competitive atmosphere. Many of this type of entrepreneurship arise from small
business entrepreneurship. As far as a small business grows over time, it can expand
further and turn into large company entrepreneurship. Such companies usually hire
advanced professionals who can help maintain their innovation and quality.

If a large company acquires small business entrepreneurship, then a small business is

called large company entrepreneurship. These companies usually aim to launch more
products or services revolving around their core products. However, to cope with rapid
technological changes, they also try to produce innovative products to attract new
customers in the developing market. Companies such as Google, Microsoft, and Adobe
come to the category of large company entrepreneurship.

Characteristics of Large Company Entrepreneurship

o In large company entrepreneurship, entrepreneurs primarily focus on planning

innovations and turn them into products to meet customer needs and attract new
customers.
o Large company entrepreneurs typically acquire new and small enterprises and
increase their reach to more customers.
o The purpose of entrepreneurs is to maintain the quality of products and sustain
continuous growth in large company entrepreneurship.

4. Social Entrepreneurship

Social entrepreneurship is aimed at producing those products and services that help in
solving the problems and issues of society and fulfilling social needs. These
entrepreneurs are focused on serving society not on earning profits.

Social entrepreneurship involves entrepreneurship, where an entrepreneur sets up an

enterprise primarily to produce products and services that can be profitable to solve
social problems. In simple words, enterprises providing innovative solutions to solve
community-based issues fall under social entrepreneurship. Social entrepreneurs are
more focused on implementing positive social changes with their products and services
rather than generating more profit. Generally, they start as non-profit businesses or
enterprises and push themselves to work towards social good.

One of the social entrepreneurship examples in India is Sumita Ghose, the founder of
Ashoka Changemakers. She strives to revive the craftsmanship and talent that is
repressed in rural India and aims to bring them recognition.

Characteristics of Social Entrepreneurship

o Social entrepreneurship is a type of non-profit venture. The money earned

through such ventures is invested towards the company's goals and research,
rather than the development of the enterprise or expansion.
o Social entrepreneurship is typically driven by funding through external investors
who support the mission towards resolving social issues.
 o In social entrepreneurship, entrepreneurs usually raise funds through various
alternative methods, such as sponsorship, grants, donations earned within their
social groups, etc.

Difference between Entrepreneur and Intrapreneur

Basis Entrepreneur Intrapreneur

An entrepreneur is an Intrapreneur is an individual

individual having a new and having entrepreneurial skills
Meaning exclusive idea to establish who works at a previously
something new. established company.

An intrapreneur’s motive is to
An entrepreneur’s motive is
Motive grow the business and make it
to bring change to the world.
better.

Intrapreneurs are innovative in

Entrepreneurs are innovative
Nature nature but less than
in nature.
entrepreneurs.

Entrepreneurs are willing to Intrapreneurs are willing to take

Risk Factor take risks. risks but less than entrepreneurs.

Intrapreneur’s goals are to get

Entrepreneurs focus on long-
Goals appraisals, appreciation, and
term profits.
promotions.

Entrepreneurs face low

Intrapreneur faces high
Competition competition for their
competition in the market.
business.

Entrepreneurs are founders of Intrapreneurs are employees of a

Position a company. company.
 Basis Entrepreneur Intrapreneur

Entrepreneurs operate
Approach to Intrapreneurs use
activities using innovative
Operate entrepreneurial skills.
methods.
 Difference between Entrepreneur and Manager

particulars Entrepreneur Manager

They are individuals

responsible for
It refers to persons who establish a company or administering and
Meaning
enterprise and takes a financial risk to get profits. controlling a group of
people in the company
or enterprise.

Position in the They are visionaries who convert an idea into a They are the employees
company business. They are the owners of the company. of the company.

They focus on ongoing

Focus They focus on business startups.
operations.

They do not bear any

Risk They bear all financial and other risks.
risks.

They focus on the daily

They focus on starting the business and expanding
Focus smooth functioning of
the company.
the company.
 Their motivation comes
Their key motivation is the achievements of the
Motivation from the power that
company.
comes with the position.

Their reward is the

Their reward is the profit they earn from the
Reward salary they draw from
company.
the company.

Their approach to every

They can be casual in their role and have an problem is formal, and
Approach
informal approach. they take a scientific
approach.

They are risk-averse.

Nature of They are risk-takers. They take calculated risks to Their job is to maintain
decisions drive the company. the status quo of the
company.

The decisions are

Decision making The decisions tend to be intuitive.
calculative.

They are trained to

They do not need to be specialised in any perform tasks and are
Specialisation
particular trade. specialists in their
domain.
 Managers enter
established businesses
Origin Entrepreneurs create and start businesses.
to maintain and improve
operations.

Managers work to
Entrepreneurs are responsible for the strategic
Risk mitigate risks within an
direction and vision of the company.
established business.

Managers focus on the

Entrepreneurs are responsible for the strategic execution of these
Responsibility
direction and vision of the company. strategies and day-to-
day operations.

Managers, however,
often focus on
Entrepreneurs are known for their innovative
Innovation improving efficiency
thinking and ability to identify new opportunities
within existing
frameworks

Managers are usually

employees and do not
Entrepreneurs typically own the business and bear bear the financial risk,
Ownership
the financial risks. though they might hold
shares or other
incentives.
 Managers, however, are
tasked with efficiently
Resource Entrepreneurs are responsible for securing
utilizing these resources
Allocation resources (like funding) needed for the business.
to achieve the
company’s goals.

Managers, on the other

hand, make decisions
Entrepreneurs often make decisions based on their within the framework
Decision-
vision and long-term goals for the company. They set by the business and
Making
have the freedom to take calculated risks. primarily focused on
operational efficiency
and effectiveness.

Challenges faced by entrepreneurship

1. Selecting a service or product

An entrepreneur may have the skills and passion to start a company, but one important
factor in starting a business is deciding what to sell. To start, they may identify a
demand in their community they could meet. A marketing firm or freelance researcher
may help them conduct market research to discover what needs there are and which
ones they have the resources to address. For example, an entrepreneur may learn that
the people in their community drive out of town to get massages, so they know there
is a local demand for a spa that they could fill.

2. Developing a sales strategy

Though an entrepreneur may recognize an opportunity in a certain community, they

might also research the best way to sell to that community. They may hire a
professional to create a marketing plan or make one themselves. To do this, they can
assess who their target audience is and what strategy might best reach them. For
example, if an entrepreneur opens a business in a rural community where they know
many people listen to the radio, they may develop a digital ad to broadcast locally.

3. Establishing starting funds

For entrepreneurs who start with lower capital, there are ways to earn funding to get
started. They may begin with a traditional bank loan or a federal small business loan.
If they plan to provide a product or service that they know has significant demand
already, they might start a fundraising campaign. For entrepreneurs who would rather
use a self-fueled growth model, they may start by targeting a small audience and
slowly building to serve larger client bases.

4. Maintaining a budget

Because running a company can be unpredictable, an entrepreneur can stay prepared

by carefully maintaining a budget. They may do this by prioritizing efficient
marketing strategies and allocating the rest according to their unique needs. Assessing
which expenses are necessary may help entrepreneurs adjust their funds to better
prepare for changes. For example, they may observe that there is a more affordable
manufacturer they can use and reallocate those savings to address higher utility costs.

5. Sustaining revenue

It's important for entrepreneurs to manage their organization's money carefully to

account for any potential delay in invoice payments. Aside from budgeting,
entrepreneurs may charge a down payment to ensure they can afford expenses until
they receive full payment. By sending invoices as early as possible and requesting
payment as soon as they complete projects, entrepreneurs can secure funding to keep
operations running efficiently.

6. Staffing the organization

To make sure that they hire people who care about their organization's mission and
will work hard, entrepreneurs may oversee the hiring process. They may publish
highly detailed listings to attract candidates whose qualifications match the
organization's specific needs. Before interviewing anyone, they can develop questions
to assess if the candidate might be a good fit for their organization and if the role can
help them in their career goals.

7. Managing employees

As the creators and leaders of an organization, entrepreneurs guide their employees on

how to best carry out the organization's goals. They can achieve this by developing
clear, detailed instructions for each role. When an entrepreneur effectively
communicates the goals of the organization, employees may better understand what
they expect and what they're working toward. For example, if the founder of a clean
water initiative tells employees the story of why they started the company, they may
feel more inspired to work toward the common goal of providing clean water.

8. Expanding the business

After an entrepreneur establishes their business, they may reach a level of success
where they want to expand. This stage of managing a business entails many
considerations, including figuring out a way to address greater demand, researching
new partners and reassessing their role in the company. An entrepreneur may revise
existing processes to better meet the company's needs. For example, if a consulting
firm uses software built for a smaller client list, they may upgrade to one that betters
suits a wider client base.

9. Managing time

Starting a new business and managing it creates many periodic tasks, so entrepreneurs
may create deadlines to help with prioritizing their obligations. Because their role can
encompass many responsibilities, entrepreneurs have several approaches they can take
to manage time. One strategy they can use is creating goals for themselves and others
in the organization. They may assess which tasks are absolutely necessary and which
they can delegate.

10. Maintaining confidence

It can take a lot of confidence to start a company and just as much to run one. It's
important for entrepreneurs to maintain confidence so they can lead effectively and
make appropriate business decisions. Entrepreneurs may set long- and short-term
goals to track and reflect on their success. Keeping a community of supportive
leadership and employees may also help. When an entrepreneur is more confident,
they may feel more prepared to address challenges.

11. Collaborating with partners

For entrepreneurs whose organization is doing well, they may consider partnering
with other professionals or businesses. Though this may help them allocate leadership
responsibilities and increase funding, there are many considerations. First,
entrepreneurs can assess areas of improvement, whether a partnership might help and
also how their skills and personalities might combine to benefit the organization. It's
important to establish the terms of the partnership with a lawyer to protect all parties'
interests.
Major Problems Faced By Entrepreneurs in India 2023

lack of Access to Capital:

Access to capital remains a persistent challenge for entrepreneurs in India. Limited

funding options, especially for early-stage startups, restrict their ability to scale their
businesses and explore new opportunities.

2. Regulatory Hurdles:

Cumbersome and complex regulatory processes pose a significant challenge for

entrepreneurs. Navigating through legal procedures, obtaining licenses, and dealing
with bureaucratic red tape can be time-consuming and frustrating.

3. Inadequate Infrastructure:

Entrepreneurs often struggle with inadequate physical and digital infrastructure, such
as a lack of reliable power supply, poor internet connectivity, and transportation
limitations. These infrastructure gaps impede business operations and hinder growth.

4. Talent Crunch:

Finding skilled and qualified talent continues to be a significant challenge for

entrepreneurs. The demand for specialized professionals often exceeds the available
supply, making recruitment and talent retention a daunting task.

5. Limited Market Access:

While India presents a massive market potential, reaching customers across diverse
geographical locations and socioeconomic backgrounds is challenging. Entrepreneurs
face hurdles in establishing distribution networks and building effective marketing
strategies to tap into the vast consumer base.
6. Intense Competition:

Entrepreneurial ecosystems in India have become highly competitive. Startups often

find themselves competing against established players and other startups in crowded
markets. This intensifies the need for differentiation and sustainable business models.

7. Complex Tax Structure:

India’s tax system is complex and dynamic, making it challenging for entrepreneurs to
navigate. Understanding and complying with various tax laws, including GST (Goods
and Services Tax), can be overwhelming and time-consuming for startups.

8. Inefficient Government Support:

While the Indian government has initiated several programs and policies to support
entrepreneurship, the implementation and accessibility of these schemes are often
ineffective. Entrepreneurs face difficulties in availing benefits and assistance due to
bureaucratic inefficiencies.

9. Limited Intellectual Property Protection:

Protecting intellectual property (IP) remains a significant concern for entrepreneurs.

India’s IP laws and enforcement mechanisms are perceived as inadequate, making
startups vulnerable to infringement and theft of their innovative ideas and products.

10. Cultural Mindset:

The prevailing cultural mindset that favors stable jobs and traditional career paths
often discourages risk-taking and entrepreneurial ventures. Convincing family and
society about the viability of entrepreneurship can be a daunting task for aspiring
entrepreneurs.
11. Lack of Mentorship:

Entrepreneurs often lack access to experienced mentors who can guide them through
the intricacies of business and provide valuable insights. The absence of a robust
mentorship ecosystem hampers the growth and development of startups.

12. Limited Support for Research and Development:

Investments in research and development (R&D) are crucial for innovation-driven

startups. However, limited support and funding for R&D activities restrict
entrepreneurs from exploring new technologies and developing cutting-edge solutions.

13. Inadequate Exit Opportunities:

Entrepreneurs face challenges when it comes to exiting their ventures. Limited options
for mergers, acquisitions, or initial public offerings (IPOs) make it difficult for them
to realize returns on their investments and attract investors.

14. Inefficient Supply Chain Management:

Efficient supply chain management is critical for startups to ensure timely delivery of
products and services. However, entrepreneurs in India often encounter challenges in
streamlining their supply chains, leading to delays and customer dissatisfaction.

15. Mindset Shift Towards Entrepreneurship:

Lastly, a significant challenge lies in fostering a mindset shift among aspiring

entrepreneurs. Encouraging an entrepreneurial mindset from an early age, promoting
entrepreneurship in educational institutions, and inspiring innovation can help create a
more conducive environment for startups.

BASIC PROBLEMS FACED BY WOMEN ENTREPRENEURS IN INDIA IN

2023

1. Fewer sectors are Women friendly

2. Lack of Social and Institutional Support
3. Poor Funding Prospects
4. Lack of Access to Professional Networks
5. Pressure to Stick to Traditional Gender Roles
6. Lack of an Entrepreneurial Environment
7. Limited Mobility
8. Lack of Education
9. Low Risk-Bearing Ability
10. Balancing Responsibilities between Family & Business
11. Stiff Competition
12. Limited Industry Knowledge
13. Missing Role Models
14. Social Construct
15. Safety Concerns

1. Fewer sectors are Women friendly

Despite the policies and measures to promote gender equality, men still dominate
India’s entrepreneurial ecosystem. According to a recent report, most women-owned
businesses in the country operate in low-revenue sectors, while men control the more
profitable sectors like manufacturing, construction, and the like.

The male-centric nature of many industries also forces women entrepreneurs to operate
in sectors that are historically called “women-friendly”, such as education, apparel, and
beauty care, among others. It limits their experience, opportunities, and capabilities to
a significant extent.

2. Lack of Social and Institutional Support

Most women business owners don’t get the social support they require to kick start their
business from families, peers, and immediate ecosystems. Lack of mentorship from the
business community is also one of the main challenges faced by women entrepreneurs
in the country.

The case is no different when it comes to institutional support. Though there are
schemes for promoting female entrepreneurship, many women don’t receive timely
guidance or help from authorities. The absence of a proper support network adversely
impacts their confidence and ability to take risks.
3. Poor Funding Prospects

As unfair as it might sound, the funding scene in India has massive gender biases.
Women-led businesses in the country lack access to capital due to the prejudices of
investors and other factors. According to a report by Innoven Capital, of all the
companies that received funding in 2019, only 12% had at least one female founder.

Many VC firms and angel investors are reluctant to invest in women-led businesses,
while banks and financial institutions consider women less credit-worthy. Moreover,
many Indian women don’t have property or assets in their name, which comes up as a
problem while applying for collateral loans or private financing.

4. Lack of Access to Professional Networks

Limited access to professional networks is another one of the basic problems of women
entrepreneurs in India. According to the Google-Bain survey, female business owners
are less integrated with formal and informal networks. The survey further indicates that
over 45% of urban small business owners suffer due to insufficient avenues of network
development.

Studies also show that most of the existing professional networks are dominated by
men, making it difficult for women to access or navigate such spaces. Consequently,
they miss out on opportunities to grow their business, find collaborators and vendors,
and build social capital.

5. Pressure to Stick to Traditional Gender Roles

Patriarchy conditions both men and women to play certain defined gender roles. Women
are expected to cook, do domestic chores, raise kids, care for the elderly, and the like.
Juggling familial and professional responsibilities is a challenge in itself, and even more
so when you set out to build a brand.

The pressure to stick to traditional gender roles is among the main challenges faced by
women entrepreneurs. Often, they are asked to give up entrepreneurship and take up an
“easy” profession that helps them focus more on family and kids. What’s more, a
woman who chooses her career over other things is looked down upon.

6. Lack of an Entrepreneurial Environment

Entrepreneurship is a long journey that involves a lot of learning, un-learning, and

upskilling. An environment that exudes a strong entrepreneurial spirit is crucial for a
person to become a successful business owner. However, many women often suffer
from the lack of such a productive environment.
To begin with, many women are forced to manage their businesses from home due to
familial responsibilities. Consequently, they lose out on opportunities to go out, interact
with the business community, and build their market access. It also impedes their
learning opportunities, access to resources and mentors, and more.

7. Limited Mobility

Limited mobility is one of the basic problems of women entrepreneurs in India. They
cannot travel alone or stay at hotels for business purposes without worrying about
safety. What’s more, many hotels in India still don’t allow women to check-in unless
accompanied by a man!

Though many financially independent women have started investing in vehicles, the
number of women owning motorized vehicles in India is still fewer than men. All these
factors come together to restrict the mobility of female business owners.

8. Lack of Education

One of the biggest credentials for a modern entrepreneur is having prior experience in
running a successful business. To supplement the lack of experience in running a
business the entrepreneur should have professional experience of working in the
relevant industry or a business management degree. Unfortunately in India, the
education of women does not get its due importance. This results in many budding
female entrepreneurs lacking the education required for running a successful business.
As women are getting access to higher education, they are leveling the playing field.

9. Low Risk-Bearing Ability

In order to invest in and run a successful business, the entrepreneur needs to be able to
bear some inherent risk. Women often do not have financial freedom and do not have
practice in making independent decisions. They also lack confidence in their own
decisions, which makes them risk-averse. This is gradually changing as with each
passing generation women are taking charge of their finances and mitigating the risks.

10. Balancing Responsibilities between Family & Business

Family is often seen as an extension of women. It is expected from married women to

enter motherhood within a certain age and also play a major role in rearing their
children. This also leads to the young mothers having to take a break from their
careers and prioritize their families. Running a business is a demanding task that often
puts women in conflict with their family commitments and even makes them feel
guilty about prioritizing their business.
11. Stiff Competition

The modern economic environment and market conditions have made the competition
between businesses fierce. They face challenges from their competitors as well as
competition within their business for leadership. They need to prove their worthiness
every step of the way to their colleagues and investors to gain their confidence. They
also need to manage a lot of output while using limited resources for the survival of
their business.

12. Limited Industry Knowledge

Many industry sectors such as manufacturing are still seen as men’s forte. Women do
not have access to the industry contacts, mechanisms, and know-how that are
necessary for running the business successfully. Despite the gradual breaking of
stereotypes, there is still a general lack of exposure in these areas. Being educated in
STEM disciplines (science, technology, engineering, and mathematics) can bridge the
gap that woman entrepreneurs currently face. Digital literacy has also brought the
revolution in empowering women to gain the right tools in gaining the right
knowledge.

13. Missing Role Models

One of the big challenges that budding women entrepreneurs face is that they do not
have enough positive role models. Because of the lack of role models, it is difficult for
them to visualize how would success look like. They also have difficulty finding
women mentors and coaches who can groom them and provide meaningful feedback.
They also struggle to find insightful articles and literature that can provide insights
into their professional and personal challenges.

14. Social Construct

Due to the long-standing patriarchal tradition in the country, gender roles have been
stringently designed. The women have been confined to a supportive role and it is not
expected from them to take a lead in the business and professional world. Although
this view is changing, it still causes frequent conflicts and rifts in the social life of
budding women entrepreneurs. There are still persisting negative stereotypes that
women are not fit for leadership roles, which need to be broken.

15. Safety Concerns

The poor state of law and order has given rise to crime against women. The hostile and
risky environment poses serious challenges for women entrepreneurs who need
mobility to manage their business ventures. This limits the women from reaching many
 locations on their own and sometimes necessitates the company of a man for simply
their safety. With important law reforms, vigilant law enforcement, and an effective
judicial system, the situation can be sufficiently improved to create a safer environment
for women attempting to enter entrepreneurial roles.

Who is a rural entrepreneur ?

A rural entrepreneur is someone or a group who identifies opportunities for

businesses in the rural area and takes the initiative to start and operate these
ventures. In addition to promoting sustainable livelihoods and promoting economic
growth, it also drives economic growth

Rural entrepreneurs refer to those who perform the business activities in. rural areas
with the exploitation of local resources. Rural entrepreneurs expand the purchasing
power. and Standard of living of the people by offering employment opportunity to the
people in rural areas

Challenges of Rural Entrepreneurs

Competition from Urban Markets

Recently people prefer to purchase goods from supermarkets and hypermarkets as they
can meet their varied needs from one place. Large organizations invest more in the latest
technology, mass production, attractive package, and advertisement. While rural
entrepreneurs are conducting the business with local resources and limited capital, hence it
is unable to afford the new technology for making the product innovative due to which they
are not able to compete with urban markets.

Lack of Family Support

An entrepreneur having a supportive family will be much successful. The family factors
which affect entrepreneurship is a relationship, different roles, belief, culture, type of
family, and family income. People born in a business family will have the talent to function
in the business as they are learning it from childhood. Usually, entrepreneurs are always
engaged with their work so they can’t spend sufficient time interacting with family and
maintaining the family relationship. Likewise, the profitability of a business is uncertain as
it involves an element of risk and uncertainty. Due to these reasons, entrepreneurs have to
face the challenge of lacking family support.

Difficulty in Availing Govt. Grants Rural

entrepreneurs are running businesses with limited capital, they seek assistance from the
government. The government provides grants under different schemes like Venture capital,
Single Point Registration, High-risk high reward, and Extra Mural Research Funding, etc.
Even though these schemes are beneficial to the entrepreneurs, they are unaware of these
schemes or not getting them on apt time. For the survival of the business in the society,
customers' demands should be fully filled as and when they are required and it will be
feasible if there is a smooth flow of production which in turn depends on funds. So, delay in
availing grants, excess formalities or conditions and procedure will hinder the production
which becomes a challenge to the rural entrepreneurs. Difficulty in availing grants means
score value is 3.225 which is also a challenge.

Marketing Issues

Rural entrepreneurs are facing marketing issues like lack of information about the market,
exploitation of intermediaries, tough competition from large-scale businesses, and lack of
selling outlets. As customers’ tastes, preferences, and fashion various day by day, rural
entrepreneurs find difficulty in analyzing the current market trends which result in loss of
markets and customers.

Shortage of Resources

The rural entrepreneurs depend upon local resources for their production, which is scarce
and limited. Resources consist of raw materials, human and financial. Most of the rural
entrepreneurship is on agro-based, handicrafts, artistic and traditional nature, but the young
people are interested to work in IT & technical field, so the rural entrepreneurs fail to get
the talented labours as their business is mostly on labour intensive. Rural entrepreneurs are
performing business with their limited owned funds so an alternative solution is availing
borrowed fund from banks, other private finance and grants from government. Exorbitant
interest rate is charged for borrowed fund.

Lack of Transportation Transportation helps in movement of goods and services from

the production center to distribution center, ensures access according to customers' demand,
and acts as a link between producers and customers. Like every business, the existence of
rural entrepreneurship strictly based on customer satisfaction which rely on the availability
of products and services in time which in turn depends on transportation facility.
Transportation helps in a major role in the procurement of raw materials from different
scattered places and supply of goods at customer’s location. Transportation challenge factor
include logistics, lack of road maintenance, hike in fuel prices, and vehicle services.

Lack of Entrepreneurship Skill

An entrepreneur must be a multi-talented person as he has to perform various roles. Rural

entrepreneurs should possess different skills such as technical, information technology,
communication, leadership, decision making, and problem-solving. The success of effective
and efficient utilization of all resources mainly depends on the managerial skill of an
entrepreneur. Lack of managerial skill will lead to poor management and ultimately affect
the overall functioning of the business.

Lack of Training

Lack of proper training is another important problem of rural entrepreneurs. Poor

performance, low productivity, lack of specialization, enhancing expenses, wastage,
breakdown of machinery, difficulty in the adoption of the latest technology, labour
turnover, and dissatisfaction are the major drawbacks due to lack of proper business
training