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ENTREPRENEURSHIP DEVELOPMENT
Module I: Understanding Entrepreneurship
ENTREPRENEURSHIP
• A theory of evolution of economic activities.
• A continuous process of economic development.
• An ingredient to economic development.
• Essentially a creative activity or an innovative function.
• A risk taking factor which is responsible for an end result.
• Usually understood with reference to individual business.
• The name given to the factor of production, which performs the functions of
enterprise.
• Creates awareness among people about economic activity.
• Generates Self-employment and additional employment
WHY ENTREPRENEURSHIP
• To improve backwardness of the people.
• Economic development of the region.
• To analysis resource utilization.
• Proper utilization of human potentiality.
• Special attention to take up new activities.
• To create self-employment and generation of employment opportunity.
• Eradication of regional imbalances.
• Better economic gain.
The early history of entrepreneurship in India reflects from the culture, customs
and tradition of the India people. The Baliyatra Festival of Cuttack, Orissa
reminiscence of past glory of International trade. To process of entrepreneurship
therefore passed through the potential roots of the society and all those who accepted
entrepreneurial role had the cultural heritage of trade and business. Occupational
pursuits opted by the individual under the caste system received different meaning of
value attached to entrepreneurship. Which is based on social sanctions? Vaishyas are
considered to venture in to business pursuits. As society grew and the process of
business occupation depended and the value work tended towards change and the
various occupational role interchanged with non-role group and sub-groups. People from
different castes and status also entered into the entrepreneurial role.
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The emergence of entrepreneurship in this part of the country got localized and
spread effect, took its own time. The concept of growth theory seems to be closely
related in explaining the theory of entrepreneurship development as well.
After the Second World War entrepreneurship received new meaning for
attaining economic development within the shortest possible time. But in the process
they were seriously handicapped by the rigid institutional setup, political instability,
marketing imperfection and traditional value system.
Britishers for their own ulterior motive destabilized the then self sufficient Indian
economy. England flourished and India had to pay for that. In the process India suffered
heavy industrial loss.
Development of business eateries is a complex phenomenon influenced by both
the internal and external factors. Internal factor originates in policies and attitude of the
entrepreneur themselves.
In controlling the business itself, external factors are beyond the control of the
business entrepreneur. They alone account for unpredictability of returns and risks
assumed by the entrepreneur. A steady growth can be observed on the business of long
cherished history of entrepreneurial development in the country is certainly promised or
the environment to be created by the state and its agencies.
The entrepreneurial motivation is one of the most important factors which
accelerate the pace of economic development by bringing the people to undertake risk
bearing activities. In many of the developing countries a lot of attention is being paid to
the development of entrepreneurship because it is not the proprietary quality of any
caste and community.
The entrepreneurship is usually understood with reference to individual business.
Entrepreneurship has rightly been identified with the individual, as success of enterprise
depends upon imagination, vision, innovativeness and risk taking. The production is
possible due to the cooperation of the various factors of production, popularly known as
land, labor, capital, market, management and of course entrepreneurship. The
entrepreneurship is a risk-taking factor, which is responsible for the end result in the
form of profit or loss.
According to A Schumpeter “The entrepreneurship is essentially a creative
activity or it is an innovative function”.
The economic activity with a profit motive can only be generated by promoting an
attitude towards entrepreneurship. The renewed interest in the development of
entrepreneurship to take up new venture should emphasize on the integrated approach.
The developments of entrepreneurship will optimize the use of the unexploited
resources; generate self-employment and a self sufficient economy.
The young entrepreneur should be motivated to come out with determination to
do something of their own and also to contribute to the national income and wealth in the
economy. If the country wants to achieve the growth at the grass root level, through
social justice and the crimination of poverty, it will have to provide institutional support
and structural changes in organization of financial institutions to promote
entrepreneurship development. Industrial development in any region is the outcome of
purposeful human activity and entrepreneurial thrust.
David Melelland emphasized the importance of achievement motivation as the
basis of entrepreneurial personality and a cause of economic and social development
through entrepreneurship by fulfilling the following needs such as 1) Need for power 2)
Need for affiliation and 3) Need for achievement.
Another school of thought says “entrepreneurship is a function of several factors
i.e. individual socio cultural environment and support system”.
Entrepreneurship is vibrant assertion of the facts that individual can be
developed, then outlook can be changed and their ideas can be converted into action
though on organized and systematic program for entrepreneurs. It was also felt that
systematic training can be given a better output and attracting people for taking up
business venture can change economic scenario.
Basic objective in developing entrepreneurship and multiplying them in the
society has been to enable the society to generate productive human resource, mobilize
and sustain the same in subsequent process of development. The spontaneity and
continuity of the process would depend on the kind of people that can be prompted and
groomed in the entrepreneurial career.
Sociologists, Psychologists and economists have all attempted to give a clear
picture of the entrepreneur. Sociologists analyze the characteristic of entrepreneurs in
terms of caste, family, social value and migration.
Psychologists on the other hand attempt to isolate entrepreneurs from general
population on various personality trials such as need for achievement, creativity,
propensity to take risk, independence leadership etc.
Economists lighted situational characteristics such as occupational
backgrounds access to capital business and technological experience and managerial
skills with economic gains considered as characteristic of entrepreneur.
As entrepreneur by implication is one who ventures out, who prefers change as
a means of growth and it the process is prepared to take a calculated risk while taking
risks he is aware of the possibilities, success as well as the consequence of failure.
Entrepreneurship is the act of being an entrepreneur, which can be defined
as "one who undertakes innovations, finance and business acumen in an effort to
transform innovations into economic goods".
This may result in new organizations or may be part of revitalizing mature
organizations in response to a perceived opportunity. The most obvious form of
entrepreneurship is that of starting new businesses (referred as Startup Company);
however, in recent years, the term has been extended to include social and political
forms of entrepreneurial activity. When entrepreneurship is describing activities within a
firm or large organization it is referred to as intra-preneurship and may include corporate
venturing, when large entities spin-off organizations.
Entrepreneurial activities are substantially different depending on the type of
organization and creativity involved. Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major undertakings creating many job
opportunities. Many "high value" entrepreneurial ventures seek venture capital or angel
funding (seed money) in order to raise capital to build the business. Angel investors
generally seek annualized returns of 20-30% and more, as well as extensive
involvement in the business. Many kinds of organizations now exist to support would-be
entrepreneurs including specialized government agencies, business incubators, science
parks, and some NGOs. In more recent times, the term entrepreneurship has been
extended to include elements not related necessarily to business formation activity such
as conceptualizations of entrepreneurship as a specific mindset resulting in
entrepreneurial initiatives e.g. in the form of social entrepreneurship, political
entrepreneurship, or knowledge entrepreneurship have emerged.
The entrepreneur is a factor in microeconomics, and the study of entrepreneurship
reaches back to the work of Richard Cantillon and Adam Smith in the late 17th and early
18th centuries, but was largely ignored theoretically until the late 19th and early 20th
centuries and empirically until a profound resurgence in business and economics in the
last 40 years.
Concept of Entrepreneurship
It has assumed super importance for accelerating economic growth both in
developed and developing countries. It promotes capital formation and creates wealth in
country. It is hope and dreams of millions of individuals around the world. It reduces
unemployment and poverty and it is a pathway to prosper. Entrepreneurship is the
process of searching out opportunities in the market place and arranging resources
required to exploit these opportunities for long term gains. It is the process of planning,
organizing, opportunities and assuming. Thus it is a risk of business enterprise. It may
be distinguished as an ability to take risk independently to make utmost earnings in the
market. It is a creative and innovative skill and adapting response to environment of
what is real.
Promotion of Entrepreneurship
Given entrepreneurship's potential to support economic growth, it is the policy goal of
many governments to develop a culture of entrepreneurial thinking. This can be done in
a number of ways: by integrating entrepreneurship into education systems, legislating to
encourage risk-taking, and national campaigns. An example of the latter is the United
Kingdom's Enterprise Week, which launched in 2004.
An entrepreneur is a person who has possession of a new enterprise, venture or idea
and is accountable for the inherent risks and the outcome of a product. The term was
originally a loanword from French and was first defined by the Irish-French economist
Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to
help launch a new venture or enterprise and accept full responsibility for the outcome.
Jean-Baptiste Say, a French economist, is believed to have coined the word
"entrepreneur" in the 19th century - he defined an entrepreneur as "one who undertakes
an enterprise, especially a contractor, acting as intermediary between capital and
labour". A broader definition by Say: "The entrepreneur shifts economic resources out of
lower and into higher productivity and greater yield.
WHO IS AN ENTREPRENUER
• He is a person who develops and owns his own enterprise
• He is a moderate risk taker and works under uncertainty for achieving the goal.
• He is innovative
• He peruses the deviant pursuits
• Reflects strong urge to be independent.
• Persistently tries to do something better.
• Dissatisfied with routine activities.
• Prepared to withstand the hard life.
• Determined but patient
• Exhibits sense of leadership
• Also exhibits sense of competitiveness
• Takes personals responsibility
• Oriented towards the future.
• Tends to persist in the face to adversity
• Convert a situation into opportunity.
Motivation for Economic Development and Entrepreneurial Achievement:
Entrepreneurship plays an important role in the economic growth and
development of nation. It is a purposeful activity includes in initiation, promotion and
distribution of wealth and service. An entrepreneur is a critical factor in economic
development and an integral part of the socio-economic transformation. It is a risk taking
activity and challenging tasks, needs utmost devotion, total commitment and greater
sincerity with fullest involvement for his personal growth and personality. The
entrepreneurial career is not a one day job nor is it bed of roses. Prosperity and success
never come easily. It takes time and needs hard work, systematic planning and business
acumen to be successful entrepreneur.
Therefore, before choosing this path one should be very careful in knowing
about his own self. This introspection process helps him in knowing about himself. Every
person has his own potentiality and resource. How he looks in to this aspect. If the
person cans understand or identify his inner traits then it helps him choosing the right
path for which he should look into his beliefs, faith values etc. For an entrepreneur it is of
great importance to know about him on the basis of above mentioned individual
consideration. These consideration give him ample scope to face his own self by asking
the question “Who I am?” If he can give meaning answer to this complex question with
exemplary courage and utter personal disregard to being exposed, then it helps him in
getting a fair idea about himself. On the whole it helps him to making the right decision in
choosing the right path for getting involved for deciding the future course of action. This
is nothing but a self-identification process. After having being proper identified his
strength, weakness and ability, he can make a decision of his choice, whether he will
take up entrepreneurship as a career or not. If yes, then in which entrepreneurial area.
Choosing entrepreneurial career is like choosing a life partner. The person has to
be there in the job forever and may have to continue in that chosen line for generations
to generation and grows in this process if it is matching; if it mismatches it goes the other
way round.
Considering this aspect he should always be governed by three basic qualitative
instincts to serve in the world of uncertainty. These are –
(1) Will,
(2) Zeal, and
3) Skill.
The hypothesis that entrepreneurship is linked to economic growth finds its most
immediate foundation in simple intuition, common sense and pure economic
observation: activities to convert ideas into economic opportunities lie at the very heart of
entrepreneurship. Entrepreneurship is a source of innovation and change, and as such
spurs improvements in productivity and economic competitiveness.
Role of entrepreneurship in economic development:
Entrepreneur:
An entrepreneur can be regarded as a person who has the initiative skill and motivation
to set up a business or enterprise of his own and who always looks for high
achievements. He is the catalyst for social change and works for the common good.
They look for opportunities, identify them and seize them mainly for economic gains. An
action oriented entrepreneur is a highly calculative individual who is always willing to
undertake risks in order to achieve their goals.
Need for Entrepreneurship Development
Economic development essentially means a process of upward change whereby
the real pr capita income of a country increases over a period of time .Entrepreneurship
has an important role to play in the development of a country. It is one of the most
important inputs in economic development. The number and competence of
entrepreneurs affect the economic growth of the country.
The economic history of the presently advanced countries like USA, Russia and japan
supports the fact that economic development is the outcome for which entrepreneurship
is an inevitable cause. The crucial and significant role played by the entrepreneurs in the
economic development of advanced countries has made the people of developing and
under developed countries conscious of the importance of entrepreneurship for
economic development. It is now a widely accepted fact that active and enthusiastic
entrepreneurs can only explore the potentials of the countries availability of resources
such as labor, capital and technology.
The role of entrepreneurs is not identical in the various economies. Depending on the
material resources, industry climate and responsiveness of the political system, it varies
from economy to economy. The contribution of entrepreneurs may be more in favourable
opportunity conditions than in economies with relatively less favourable opportunity
conditions.
Entrepreneurship and Economic Development
Entrepreneurship helps in the process of economic development in the following ways:
1) Employment Generation:
Growing unemployment particularly educated unemployment is the problem of
the nation. The available employment opportunities can cater only 5 to 10 % of the
unemployed. Entrepreneurs generate employment both directly and indirectly. Directly,
self employment as an entrepreneur and indirectly by starting many industrial units they
offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of
unemployment.
2) National Income:
National Income consists of the goods and services produced in the country and
imported. The goods and services produced are for consumption within the country as
well as to meet the demand of exports. The domestic demand increases with increase in
population and increase in standard of living. The export demand also increases to meet
the needs of growing imports due to various reasons. An increasing number of
entrepreneurs are required to meet this increasing demand for goods and services. Thus
entrepreneurship increases the national income.
3) Balanced Regional Development:
The growth of Industry and business leads to a lot of Public benefits like transport
facilities, health, education, entertainment etc. When the industries are concentrated in
selected cities, development gets limited to these cities. A rapid development, when the
new entrepreneurs grow at a faster rate, in view of increasing competition in and around
cities, they are forced to set up their enterprises in the smaller towns away from big
cities. This helps in the development of backward regions.
4) Dispersal of economic power:
Industrial development normally may lead to concentration of economic powers
in a few hands. This concentration of power in a few hands has its own evils in the form
of monopolies. Developing a large number of entrepreneurism helps in dispersing the
economic power amongst the population. Thus it helps in weakening the harmful effects
of monopoly.
5) Better standards of living:
Entrepreneurs play a vital role in achieving a higher rate of economic growth.
Entrepreneurs are able to produce goods at lower cost and supply quality goods at lower
price to the community according to their requirements. When the price of the
commodes decreases the consumers get the power to buy more goods for their
satisfaction. In this way they can increase the standard of living of the people.
6) Creating innovation:
An entrepreneur is a person who always looks for changes. Apart from
combining the factors of production, he also introduces new ideas and new combination
of factors. He always tries to introduce newer and newer technique of production of
goods and services. An entrepreneur brings economic development through innovation.
Entrepreneurship also helps in increasing productivity and capital formation of a
nation. In short, the development of the entrepreneurship is inevitable in the economic
development of the country. The Role played by the entrepreneurship development can
be expressed in the following words:
“Economic development is the effect for which entrepreneurship is a cause”
Entrepreneurship directly affects the economic development and also serves as
the positive source of economic growth. Economic development means an in crease in
the per capita income of the country. Entrepreneurship is driving force behind the growth
and development of the country. There is direct relationship between development and
entrepreneurship.
Many economists’ theories consider economic development and entrepreneurship as
complimentary to each other.
David McClelland’s Theory of Achievement Motivation:
This theory is considered as one of the best theories of entrepreneurial development.
This theory revolves around entrepreneurial behavior and needs. It focuses on three
aspects:
Need for achievement: This need plays an important role in determining
the success of activities done in to McClelland, economic behavior can be
described through achievement orientation. McClelland wrote: “need for
achievement is a desire to do well, not so much for the sake of social recognition
or prestige, but for the sake of inner feeling of personal achievement.”
Need of Power: This refers to the desire of a person to be influential in the
group. This need offers direct satisfaction and authority to managers.
Need for affiliation: This need helps in maintaining a personal relationship with
the subordinates. People with high need affiliation are more desperate about
love, relationships and friendships. They love others and expect others to love
them.
On the basis of above mentioned needs, McClelland pointed out that following factors
are necessary for entrepreneurial development:
Twin characteristics of entrepreneurship:
i) Performing activities in a brilliant manner,
ii) Decision-making under uncertainty.
Belief in personal accomplishment: Need for achievement means An
individual’s need for personal success through excellence. Such person enjoys
taking responsibility. They take moderate risk and try to come out as winners all
the time.
Psychological factors for entrepreneurial motivation: Need for achievement
encourages the individual to take risk. Psychological factors that are responsible
for entrepreneurial development are as follows:
i) Risk bearing,
ii) Goal orientation,
iii) Desire to achieve success,
iv) Willingness to take responsibility,
v) Anticipating possibilities,
vi) Feeling of personal accomplishment,
vii) Concrete measures of task performance.
Inner concerns as the prime movers: According to McClelland, inner concerns
are prime movers of entrepreneurship. These forces motivate the person to take
risks, invent new ideas and attain profit maximization.
Lack of ambition in Less Developed Countries (LDCs): Ambition among people of
much country is very important for its development. In an underdeveloped
country people lack ambition, which is a major hurdle for the need of
achievement that results in the lack of enterprise in LDCs?
Enterprise and Society:
The activities of an entrepreneur cover a wide range in a conducive and congenial social
environment. The social environment includes a number of factors which are critical for
the growth of entrepreneurship and are listed as follows:
Family background: Family background is an important determinant in
entrepreneurial environment and involves factors like family type, family status,
and so on.
Caste system: There are certain castes that have more entrepreneurial
talent than others. This is because they have latent potential and specialized
culture by virtue of certain activities and/or means of livelihood traditionally
practiced by them that helps to foster entrepreneurship.
Social sanctions: Social sanctions and role expectations are important factors
that determine the growth of entrepreneurs.
Religious background: Religion too plays a crucial role in influencing
entrepreneurial emergence and growth.
Kith and kin: Entrepreneurial initiatives are also determined by the success of
one’s kin, friends, relatives and others in any particular venture.
Social Status: Social status contributes greatly to the growth of the
entrepreneurship. It is human nature to want to rise in the society and be
regarded as a man of esteem.
Social values: Social values and philosophy of a country are important in the
growth of entrepreneurial culture in the society.
Social responsibility of the business: This entails efficient utilization and
conservation of natural resources for the benefit of the society. Entrepreneurial
initiatives must to be carried on within the framework of social rules, laws of the
land and the social policies.
Why and how to start Business:
Entrepreneurial traits and skills:
Entrepreneurs play a significant role in the development of the economy. An
entrepreneur affects the lives of many people as it creates new job, provides the
product, develops the technology, and provides feasible solutions to the existing social
and environmental problems. Entrepreneurship creates wealth for the person and for the
country. It is the most powerful force of the economy.
Today, the business environment and technological advancements present
complex challenges to an individual’s entrepreneurial drive and determination. Most
entrepreneurs prefer to outsource projects to save on operating cost. They even
outsource the most critical process of their manufacturing or business operations.
Entrepreneurs need the right interest to initiate the right motivation for starting a
small business or project. Interest comes from the dream to improve an individual’s
lifestyle, social status, control of future, and raise standard of living. Entrepreneurship is
a natural medium to fulfill economic aspirations, channel drive and energy, and build
something for themselves.
Ability to organize: He should be able to organize various factors effectively. He
has to understand all the aspects of the business.
Professional approach: He should be objective and professional in approach.
Risk bearer: He should be risk taker. He should be ready to bear risk and
uncertainties.
Innovative: Organizer should be innovative. He should adopt modern techniques
of production. He should not be reluctant to changes.
Decision Making: One has to take right decision at a right time by showing his
promptness. Quick decisions are expected but hasty decisions shouldn't be
taken. Delay in decisions may increase cost of project and reduce the profits.
Negotiation skills: Businessman regularly comes into contact with various
persons like consumers, workers, government officials, etc. so he should
communicate tactfully.
Vision & Leadership: Entrepreneurs must have a vision of where the company
will be in the future. In addition, you must be able to communicate you vision so
as to motivate employees, investors, and partners to help you achieve that
vision. You must be able to identify staffing needs, expertly fill them, and lead
your team to success. Rarely do entrepreneurs build successful companies all by
themselves.
Focus & Execution: Entrepreneurs must focus to make sure that goals are
achieved, customers are satisfied, and employees are motivated. For most
entrepreneurs, staying focused is harder than it sounds. Be careful not to be
seduced by the next exciting opportunity without executing on the priorities at
hand. And don't let perfectionism prevent you from taking action, either; at the
end of the day, a product on the market is better than a product shelved due to
lack of focus, execution, or perfectionism. Get to market and get feedback from
your customers as soon as possible.
Persistence & Passion: As an entrepreneur, you must be passionate about
what you are trying to accomplish. In addition, you must be willing to commit
whatever is needed of them, whether it's time, energy, money, or other
resources. You must persist through trying times (which will be frequent), and
fight as much as needed to achieve the goals you have set for yourself and your
team.
Technical skills: As the owner of your firm, you may not need to be the most
skilled technician on your team. But you need to have necessary foundational
knowledge to be able to lead your technical team and make informed decisions.
Flexibility: Successful entrepreneurs understand that the world and the
environment in which they operate are constantly changing. While you must
focus on the end game, you also must adapt your strategies and offerings to
meet changing market conditions.
A wide range of skills are seen as entrepreneurial and useful to entrepreneurs, these include both personal traits and skills:
Management skills - the ability to manage time and people (both yourself and others) successfully
Communication skills and the ability to sell ideas and persuade others
The ability to work both as part of a team and independently Able to plan, coordinate and organize effectively Financial literacy Able to research effectively, for example available markets, suppliers, customers and the competition
Self motivated and disciplined
Adaptable Innovative thinking and creative The ability to multi-task Able to take responsibility and make decisions The ability to work under pressure Perseverance Competitiveness Willingness to take risks Ability to network and make contacts
Many, if not all of these skills and traits are also useful to entrepreneurs, those who are
entrepreneurial within an existing organization (internal entrepreneurs). These skills and
traits would also benefit all employees within a business and so are useful for graduates
to have. Many of these skills, such as communication skills and the ability to work as
part of a team, are already promoted within existing degrees.
In addition to those more general skills listed above, other more specific or business
related skills, will be of use to entrepreneurs, these may include:
Being able to draw up a business plan for a new venture,
Being able to market and sell a new product or idea, Financial skills, such as book-keeping and calculating tax, Awareness of intellectual property and possibly patent law.
The most significant influence on an individual's decision to become an entrepreneur is
workplace peers and the social composition of the workplace. Entrepreneurs also often
possess innate traits such as extroversion and a propensity for— risk-taking. According
to Schumpeter, an entrepreneur characteristically innovates, introduces new
technologies, increases efficiency, productivity, or generates new products or services.
An entrepreneur acts as a catalyst for economic change and research indicates that
entrepreneurs are highly creative individuals who imagine new solutions by generating
opportunities for profit or reward.
There is a complexity and lack of cohesion between research studies that
explore the characteristics and personality traits of, and influences on, the entrepreneur.
Most studies, however, agree that there are certain entrepreneurial traits and
environmental influences that tend to be consistent. Although certain entrepreneurial
traits are required, entrepreneurial behaviors are dynamic and influenced by
environmental factors.
Psychological studies show that the psychological propensities for male and
female entrepreneurs are more similar than different. Perceived gender differences may
be due more to gender stereotyping. There is a growing body of work that shows that
entrepreneurial behavior is dependent on social and economic factors. For example,
countries which have healthy and diversified labor markets or stronger safety nets show
a more favorable ratio of opportunity-driven rather than necessity-driven women
entrepreneurs. Empirical studies suggest that women entrepreneurs possess strong
negotiating skills and consensus-forming abilities.
Mind Vs. Money in Commencing New Ventures:
Starting a new business venture can be an exciting and important decision for an
individual with ambition. However, there are a number of considerations that new
entrepreneurs need to keep in mind as they take the initiative to establish their own
enterprise. Failure to fully consider some substantial concerns could leave entrepreneurs
feeling uncertain in the midst of their new ventures.
Develop a solid business plan: Once you know which entrepreneurial avenue you plan
to explore, you need to begin researching the industry. Get a grasp on the recent market
trends and where the market will likely be headed in the near future. Based on these
observations, make a list of obtainable goals that will enable your enterprise to get
started off on the right foot. Then brainstorm various approaches to achieving these
goals. Determine which scenario is the most sensible for you to commit to. Finally, if
your efforts should fall short of success, you still have alternative options to fall back on.
Follow all legal regulations set for your industry: Getting a business license usually
means jumping through a variety of legal hoops no matter what the specific occupation.
Some legal prerequisites can go by the wayside while trying to establish a new
enterprise. Deciding which insurance policies to secure and what kind of health benefits
to offer potential employees are just a few legal considerations you might have to think
about. One technicality many new professionals forget about is the use of surety bonds,
which are required by law in many industries before a business license can be issued.
Surety bonds are similar to—though separate from—insurance, as they provide an
additional financial protection. Be sure to check local bonding regulations for your
industry to make sure your business will be in compliance, as auto dealer bond
regulations are obviously very different from mortgage broker bond regulations.
Be prepared to invest a lot without earning it back immediately: With limited
exceptions, you shouldn’t expect to turn a profit for a few years. So early on, you’ll need
to determine how much money you should plan to invest in your venture during the first
few years. It’s also a good idea to secure either extra savings funds or a secondary
income to live off of during this time.Find a generous lender who understands your
business plan and has faith in its ability to succeed. Such a lender will back you up when
times get rough. And don’t forget that you’ll probably invest a great deal of time and
money to get your name known within your industry.
Never underestimate the importance of effective (online) marketing: Marketing in
today’s business market is neither simple nor limited. With seemingly infinite advertising
opportunities—from print to television to the internet—ingenuity can go a long way. Build
an engaging website that’s easy to navigate, showcasing your business to potential
clients or consumers. Research shows that the majority of people judge a business
based on its online presence. Without a website, you’ll be left behind; with an
unprofessional or confusing one, you could misrepresent the quality of your business.
Fully commit yourself to your endeavor: Don’t expect phenomenal success if you
aren’t willing to fully dedicate yourself to your project. Realize that this might mean late
nights at the office and choosing business meetings over social events. Since it’s your
undertaking, it’s up to you to decide when, where, and how much you work. You’ve
already made the decision to strike out on your own, all that’s left is executing your
success.
How to Raise Money for a New Venture:
There are many potential entrepreneurs out there, wondering how to raise money for a
business venture.
Anyone looking to start a company or business venture of their own, needs to
know how to raise money for a business. The capital is one of the first things that need
to be taken into consideration when one is setting out on a business venture, and there
are many different sources to obtain this capital. It is not necessary to stick to one
particular source rigidly; even a combination of various different sources can be made
use of.
Anyone who is wondering how to raise money for a restaurant, a small business,
an advertising agency or any other small-scale venture should keep these methods in
mind. Approaching the right people for the money is vitally important for the success of
the business, and if this is not catered to properly, the business will be doomed from the
very beginning.
Personal Savings: This is the most obvious source of money for starting a business. If
you have saved up enough money over the years, go ahead and make use of it for your
business. You will not be answerable to anyone, and you will not have to worry about
repaying someone. If you choose this option, ensure that you are not using all your
savings though. Many people neglect this option of how to raise money for a business
because if they lose the money, they will have nothing left to live on.
Venture Capitalists: This is the next most obvious source for your potential business.
Venture capitalists are professional agencies who put in money, or venture capital, into
an upcoming business. What they get in return is either a share of the business, or a
share of the profits, or pretty high interest rates. It may sound like exploitation, but this is
one of the best ways to get money. Venture capitalists are always looking for new and
innovative business ideas that are likely to succeed.
Angel Investors: These are a refined form of venture capitalists, but many people think
they mean the same thing. Angel investors are less demanding than venture capitalists,
and are with your business in the long run. Usually, they are someone who you would
know personally, and they are simply looking for ways to get a higher return on their
investment. How companies raise money depends a lot on the nature of the business,
and the method of entrepreneurship adopted. Angel investors also help out the business
by providing some guidance and mentoring.
Personal Borrowings: Here is a method on how to raise money for a business that
should be avoided as far as possible. You can borrow money from someone you know,
namely your friends, family or other people. The problem here is that once you mix
business and personal relationships, things start to get a bit sour. This is a situation that
needs to be handled with great tact and diplomacy, and not everyone can manage to do
that. Still, this is a method that many people opt for.
Bank Loans: Another answer to how to raise money for a small business, is to
approach a bank for a small business loan. With banks you will not be required to pay a
very high interest rate, but you will need sufficient documentation about the business
model of your business. Along with that, your credit history and financial stability will also
be scrutinized, to see if you are worthy of getting the loan. Most people would love to get
a bank loan, but are simply not eligible. This is especially true for someone who is
wondering how to raise money to start a business without owning any fixed assets.
Advertising: Here is another answer, but one that requires a suitable amount of
investment, and more than a fair share of patience. If you can handle the advertising of
your upcoming company well, you can get more than enough money to sustain it in the
long run. There are some websites that also let you advertise your business plan, and
then suit you up with a matching investor. This is a slightly unreliable method for sure,
but it works wonders if one can find the right match. People wondering how to raise
money for a marketing campaign, can use the methods already mentioned above.
Other Options: Here are some other answers to the question 'How to raise money for a
business'. One can approach some small business investment companies, some
business development commissions, some life insurance companies or a money broker
as well. The reliability of these other options will not be very high, and their demands
may be exorbitant, but if you have run out of all other options, then this is something that
you will need to resort to.
You should move as soon as possible in order to get as much capital and business
financing as you can. There are a variety of sources available to you, and as long as you
have a great and reliable business plan, you will be able to procure capital. It is not all
that difficult to learn how to raise money for a business, but all you need, more than
anything else, is the faith and belief in yourself.
Entrepreneurial success and failures
Entrepreneurial Failures:
In the Watson & Everett (Defining Small Business Failure) article small business failure
can be classified into seven primary reasons. The first one, being bankruptcy is defined
as discontinued operations with resulting losses to its creditors. Another reason for
discontinuance is prevention from further losses, which means the owner recognizes the
need to end the business due to continuing personal financial losses while the creditors
might still be receiving their agreed-upon payments. The third reason, ‘making a go of it’
is the most subjective reason as it is based upon personal goals not being reached.
While the business may not be running negative, the entrepreneur gives up because it
might be too time consuming, stressful, disapproving and whatnot compared to the
profit. The remaining reasons consist of retirement due to bad health, sale of business to
realize a profit, unknown and other reasons.
The reason I summarized 14 pages of text into one single paragraph is not out of haste
or to get off lightly, but because I considered it not to be essential in answering the topic
question. Since the first objective of this case is to give my opinion when an
entrepreneur has failed I will present a definition for it as well as four reasons that can
lead towards or away from it.
“An entrepreneur has failed when he/she stops being an entrepreneur.”
The best way to encourage entrepreneurship is to focus on the entrepreneur and not the
factual, statistical or financial results he/she or the nation in average performs. This is
why I focus on the individual entrepreneur when defining when he/she has failed and the
reasons behind it.
These reasons can be found in the first chapters of Kiyosaki (Retire Young Retire Rich):
The power of your mind and listening to yourself is the most important factor. Failing
your first business is the key critical event that will test if you have failed as an
entrepreneur. Listening to the loser, wimp, coward and cynic inside you will cause you to
stop being an entrepreneur and seek the security of working for another business.
However, choosing to listen to the winner, hero, giant and opportunist inside you will give
the strength and the whys to start another business venture.
Another factor, also created by your mind is reality. By continuously expanding your
reality about what you can do will help overcome obstacles that you previously thought
you can’t do. The process on how to do this is by being a lifelong learner.
The third reason an entrepreneur can fail is by listening to others. By listening to cynics
and poor people with limited reality you risk believing that starting a business is risky
while it does not have to be. The conflict of interest is caused due to differences in reality
while finding people with similar interests and reality will improve the business.
The last way an entrepreneur can fail is through giving in on their values. Everyone likes
to see themselves as honest, caring, loyal and fair. But when the going gets rough it’s
the thief, crook, liar and tyrant in you that can get your attention. By being able to block
them out and face your creditors, investors, co-workers and clients with the right values
when things go bad you won’t risk not getting the opportunity to start another business in
the future.
While these factors are explained in an overly simplified way it is a way of explaining my
shared views with this particular author while the direct answer to this question is my
personal thought written as a quotation.
How are failed entrepreneurs treated?
Again focusing on the entrepreneur we will find the relevant factors explaining how
entrepreneurs are treated and the reasons why some are treated differently than others.
Ask your creditors: The bankers’ and investors’ opinions about the entrepreneur will be
dependent on how they were treated when the business failed. If the exit strategy was
bankruptcy there is a great chance that the entrepreneur will have to find new creditors
for a new business venture. Then again, if the small business was terminated to prevent
further losses, and debts are ultimately paid these people will love you and want to hear
your next business plan and idea.
Ask your subordinates/co-workers: While founding a small business with the goal of
selling it with a profit might be an acceptable solution for the entrepreneur, the
employees of the company might not see eye to eye. Since selling or restructuring a
business might cost some employee’s their jobs it doesn’t matter how fancy the farewell
party is. And those who do get to keep their jobs might have good or bad opinions about
getting a new boss/business owner.
Ask your clients: The clients’ perspective on the entrepreneur goes through the product
it provides. The greater the need and benefits the product fills, the more supportive the
clients who used it are towards the entrepreneur wanting to start fresh. On the contrary
the product can be unhealthy, addictive or in another way unapproved by the society
sharing no respect towards the person enabling its distribution.
Ask your friends and family: When it comes to those who are nearest and dearest the
opinion will be based on their reality. If the majority thinks entrepreneurship is risky and
hard work he/she risks following their advice. If the majority thinks working all your life to
make others rich is risky then this can be the entrepreneur’s reality.
Why Do So Many New Businesses Fail?
1. Poor Execution
When you're the boss, the only place you should point fingers is at the mirror.
Crisp execution—rather than a clever idea— is vital to the success of new
businesses. It stands to reason, therefore, that poor execution is the downfall
of most startups that go bust. There are several ways you can avoid
execution failure. First, you should conduct an honest evaluation of your
skills and only pursue opportunities that are aligned with your strengths. Entrepreneurs who
are blinded by greed or arrogance are more prone to getting in over their heads. It's also
wise to surround yourself with talented people who aren't afraid to speak up when you're
headed off a cliff.
Companies with inept leadership usually fail in the first year or two, but even established
companies can stumble badly when they outgrow the capabilities of the founding team. Bill
Gates led Microsoft from inception to its current position as one of the largest and most
successful companies in history, but this is seldom the case. As a founder, you need the
discipline to know when to hand over the reigns to a professional manager who can take
your business to the next level.
2. No Viable Market
What if we launched a business and nobody showed up?
Each day, entrepreneurs from the "build it and they will come" school of
business invest their money in a cool idea with the hopes that customers
will magically appear once they open the doors. All too frequently, these
hopes turn out to be in vain. History is replete with ventures that crashed
and burned because the founders spent all of their time and money developing a product
without bothering to consider how to attract customers. Even worse, many did not really
understand what customers valued and were willing to pay for.
It's imperative to research and validate the market before you launch your business. Talk to
prospective customers and find out what they really need. Chances are, you will end up with
a much more compelling offering than what you initially dreamed up on your own.
Remember, find the customers first, and then look for a solution.
3. Too Much Leverage
Give me a lever long enough and I will bankrupt my company.
Mature companies can predict revenues over the next few quarters with
some degree of certainty. These businesses can make prudent use of
leverage, both financial (debt) and operating (fixed overhead costs), to
improve equity returns. However, the financial crisis of 2008 demonstrated how even the
most established companies can become over-leveraged, as Bear Stearns and Merrill Lynch
can well attest.
Revenues projections for early-stage companies can be all over the map, which means that
new ventures have even less margin for error than larger competitors. In this environment, it
can be dangerous to take on more than a modest amount of debt or other fixed obligations
(rent, salaries, etc.). If revenues take longer to ramp up than expected—as they nearly
always do—you may find yourself handing the keys of your business over to your creditors.
4. Undercapitalizing the Business
Maybe you should've waited to order that red Ferrari after all...
It's all too common for entrepreneurs to grossly underestimate the amount of
time and capital necessary to reach cash flow breakeven, causing many
promising ventures to shut down prematurely. Be conservative with your
financial projections and plan on having adquate funds when you launch to
cover all sunk costs (including startup losses) until your company becomes cash flow
positive.
If you don't have enough savings to cover the required investment, it may be tempting to
launch your startup under the assumption that you will be able to obtain funding at a later
date. While staging investment has its advantages (preserving the option to abandon, higher
valuation and—therefore—less dilution, etc.), this strategy can backfire and leave you unable
to get the money when you need it most or force you to negotiate with banks and investors
from a position of weakness. It's often better to change the business model to bring required
investment in line with available resources.
5. Lack of Competitive Advantages
Never bring a knife to a gunfight!
Does your town really need another dry cleaner, pizzeria, or lawn care service?
Entrepreneurs frequently start these me-too kind of businesses because of
their simplicity and modest capital requirements. However, the lack of
competitive barriers renders them extremely vulnerable to new entrants, who
will gladly cut prices to the bone to steal customers.
If you want your startup to thrive, you need something that insulates it from competition. It
could be a great location, a cool brand, proprietary technology, or a cost structure that
cannot be easily replicated. None of these advantages is likely to be permanent, but they
only need to shield you long enough for your company to take root. This will give you time to
make investments that create additional barriers.
6. Competing Head-to-Head with Industry Leaders
Better sharpen those elbows...
A sure sign of impending failure is an entrepreneur who plans to
bootstrap his new business while competing directly against entrenched
market leaders. Large businesses have enormous resources to deter
competitors from entering their markets. Big companies can undercut your prices,
outspend you on advertising, and choke off access to suppliers and distributors. I
strongly advise against making a frontal assault unless you have a world-class team and
very deep pockets. Even then, your chances of success are likely to be disappointing.
7. Picking a Niche that is too small
Don't be a market of one!
Most small businesses compete successfully against larger rivals by
specializing in a niche market. However, you still need to do your
homework to be sure that the niche is large enough to support your
business and that customers are not too expensive to find and serve.
You may discover that niche markets can be just as fiercely competitive as the mass
market. You need to figure out how fast your niche is growing and how much market
share you will need to capture.
If your financial projections require you to hold more than a few percent of market share
to remain profitable, be careful. Don't press ahead unless you can convincingly
demonstrate to yourself how your competitive advantages will enable you to become the
market leader.
8. Breakup of the Founding Team
Breaking up is hard on you -- and your company.
A startup can be a high-stress environment, especially when you are
struggling to turn the corner before the lights go out. At moments like
this, disagreements about the direction of the company or the division
of profits among the owners can lead to a rift within the founding
team. Because people wear lots of hats in startups, the sudden departure of a key
executive can doom a fledgling organization. This makes it imperative to structure
agreements so that the founders and key hires are treated fairly and that everyone's
interests are closely aligned with the success of the new venture.
9. Poor Pricing Strategy
The price is right?
The most common method for setting prices is to start at the unit cost and
then mark up the price to achieve a profit, so-called "cost-plus" pricing.
Unfortunately, cost has little to do with how a product or service is valued
by customers, which can lead to systematic under pricing.
Even worse, cost-based pricing can lead to prices that are greater than what the market
will bear. Because unit cost is related to sales volume, high prices lead to fewer sales,
which in turn increase unit cost, leading to a further round of price increases.
10. Growing too fast
What goes up?
Growth is considered the hallmark of business success, but
uncontrolled growth can—and does—kill entrepreneurial companies
for two primary reasons. The first is that businesses need systems
and infrastructure to scale properly, but few invest the time and effort
to lay the foundations for growth in those first hectic years. That's too bad, because
things tend to spin out of control when you put the pedal down. This can be especially
problematic for companies that receive a large infusion of outside capital. It's the
equivalent of trying to break the land speed record by strapping a jet engine onto a soap
box racer. Don't be surprised when the wheels come off.
The second reason is that top-line growth requires additional investments in fixed assets
(warehouses, machinery, trucks, etc.) and working capital (inventory, accounts
receivable, etc.). At controlled rates of growth, companies are able to finance
incremental sales through internal cash flow. Hypergrowth, on the other hand, can suck
up large amounts of cash, forcing businesses deep into debt or bringing the whole
enterprise to a screeching halt. Many times, owners are not even aware of the
impending collapse, because they focus on profitability (as depicted on the income
statement) rather than cash flow. Never forget that cash is the lifeblood of your business!
Entrepreneurial Success
Factors affecting entrepreneurial success:
What are the critical factors that can make an entrepreneur to become a successful?
This is a subject of research and analysis of many professionals and institutions. It is
very possible that we cannot expect to have an entrepreneur with all characteristics that
make them successful. But, the combination of the most important factors can help you
to build and manage successful business.
15 Entrepreneurial Success Factors
The most critical and most important factors that can make an entrepreneur to become a
successful are:
Willingness to take action. This is the first and most important factor for each potential
and current entrepreneur. All other factors presented below, won’t have importance if he
or she didn’t take a real action.
Knowledge. They must have superior knowledge about business issues for business
that they start.
Creativity. They must have creativity to be unique and continuously improves business.
Skills. Each entrepreneur and each business need different entrepreneurial skills that in
some cases can be crucial for business success.
Intelligence. They must be intelligent to manage all possible situations and to solve the
hardest problems that will be a constant in business life.
Patience. They must be patient and to continue after losing the first battle, because the
war is not finished. It’s only the beginning.
Persistence. Persistence simply is a refusal to give up from something, or ability to keep
your actions against your personal feelings that you’re not ready for such actions.
Feelings and motivation didn’t produce results, but the action is something that will
produce it.
Teamwork. Nobody can achieve anything alone so this is true also for an entrepreneur
because they’re not a “Superman”. They must be team players for their and business
success.
Calculated risk. This is truly one of the most important questions: did they take the risk?
Yes, each business startup is in some level risky. However, more important is how a
successful entrepreneur takes a risk? The word calculated risk is the most appropriate
word for this feature.
Self-Confidence. Self-confidence is a really important and key factor. I think that
nobody would be an entrepreneur if don’t have self-confidence that he knows how to
start and manage their own business.
Experience. Sometimes experience is in category not must have as a factor, but it is
something that will increase business potential energy. They must employ all present
and previous experience they had into the business.
Talent. Talent is something inborn in an entrepreneur. Sometimes talent can be
replaced with knowledge.
Honesty. Honesty is important in every case, but sometimes honesty, being real can be
the biggest enemy of an entrepreneur in some complex conditions.
Connections. More connection the more possibilities for building a successful business.
Luck. Luck is a psychological factor. Some people can say that they don’t have a luck.
And indeed there are some “lucky people” who just accidentally found the right place at
the right time. However, it is a small percentage and cannot be included as a serious
factor for success.
Why The Number One is most Important Factor?
First, all the factors listed without a willingness to take action represents a potential of an
entrepreneur. Actually, this is the business potential energy stored in them that can and
should be converted into kinetic energy, which will perform the job.
What would be the Profile of a Successful Entrepreneur?
Profile of an Entrepreneur –
Ready to take actions build upon a knowledge and creativity while combining the
skills and intelligence, and is patient and persistent, have the ability to work in
teams, take risks, but not insane risk and have self-confidence and experience, while
it’s honest, sometimes they are lucky, and they have great connections that can help
doing business.
Anyway, all factors or characteristics are important because they’ll increase business
potential energy of entrepreneurs, and thus the overall business potential energy.
Environmental dynamics and change: Creating an Entrepreneurial Environment
What We Learned
When economic developers talk about a positive environment for economic
development, they are often talking about the business climate in the traditional sense –
are there sites in the industrial park, is the community “business friendly,” are there
roads and sewers for new factories? When we talk about an entrepreneurial
environment, we’re talking about much more.
There are three components of this environment that entrepreneurs need to address:
Culture – Awareness of the importance of entrepreneurs to the local economy,
celebration of the value that entrepreneurs bring, openness to entrepreneurs who often
march to the beat of a different drummer, acceptance that failure is part of the
entrepreneurial process and a willingness to encourage and support entrepreneurs when
their first (or even second) venture doesn’t pan out
Infrastructure – Moving beyond the typical notion of infrastructure to include traditional
and non-traditional leadership, educational institutions like community colleges and
regional universities, cultural and recreational resources, quality schools, social
organizations that are diverse and emphasize creativity
Entrepreneurial support elements – Specific programs and initiatives designed to
provide a range of support to entrepreneurs of all types when and how they need it,
including service providers like the Chamber and Small Business Development Centers,
networking organizations and opportunities, financing programs, business incubation
services, mentoring and coaching, and youth entrepreneurship education in and outside
the schools.
Understanding the components of an entrepreneurial environment is just the first step in
helping your community become more entrepreneurial. You also have to consider your
readiness for entrepreneurship. As part of the Energizing Entrepreneurship institute, we
explored a Readiness Assessment tool that provides a useful way for you to think
about whether your community is ready to embrace entrepreneurship as a development
strategy.
This tool identifies six readiness factors to consider:
Openness to entrepreneurship as a development strategy
Commitment to balancing business attraction and support for entrepreneurs
Availability of entrepreneurship programs and support services
Willingness to invest in entrepreneurship development strategies
A leadership team committed to entrepreneurship
Willingness to work beyond town borders to tap resources and achieve success
Entrepreneurial Process:
Entrepreneurial process can be defined as a process of starting new venture. It involves all the functions, activities and actions associated with perceiving opportunities and enabling organizations to follow them.
(A) Identifying and evaluating opportunities
Identifying and evaluating opportunities is a very time consuming. Identification of opportunities is done by keeping in mind the fact that it should fit the personal skills and goals of entrepreneurs. Before identifying any efficient business opportunity, entrepreneurs need to consider the following:
Must collect the information about the resource base, where he/she is going to start a new business such as agriculture, forest and mines.
Must collect the information on opportunity identification, which means the sources from where he can acquire funds for starting a new business.
Must take the help of existing entrepreneurs in order to discuss the potential business opportunities.
Must take a thorough study of the organization, which are not performing well.
Must collect information on the availability of infrastructure such as power, water and transport.
Today, there are no formal mechanisms that can be used for identifying and evaluating opportunities. In order to get information related to opportunities, entrepreneurs basically depend upon following sources:
Managing Enterprise
Identifying and evaluating opportunities
Creating Business Plan
Identifying Resources
Members of distribution system
Consumer and business associates
Technical people and experts
After identifying the opportunities, it is the responsibility of the entrepreneurs to evaluate the opportunities. Evaluation of opportunities is a very complex tax and it allows entrepreneurs to assess, whether the specific product or service can satisfy the expectations of both entrepreneurs and consumers.
Evaluation of opportunities includes:
Assessing the length of opportunities
Real value of opportunities and perceived value of opportunities.
Determining the risks, rewards and advantages of the opportunity in the competitive environment.
- Risks and rewards can be determined on the basis of market size and time period available for creating a new venture.
- Opportunity assessment plan is also a very useful method that can be used for the evaluation of opportunities.
- Evaluation of opportunities helps in making decisions whether to act on an opportunity or not.
Opportunity assessment plan includes the following aspects: Product description
Assessment of opportunity
Description of all physical resources required for starting a new venture
Sources of financial capital
(B) Creating a Business Plan
Business can be described as a written document prepared by an entrepreneur to specify the details about internal and external elements required for setting up a new venture. Business plan can be considered as a combination of different type of functional plans such as:
Production Plan: It specifies the details related to the production of services or goods. Creating a production plan is a pre production activity and it is an integral part of the overall business plan. It is based on the forecasts made in terms quantity and quality requirements of the product.
Organizational Plan: It is a list activity that every individual of the organization has to perform. It contains the list of the work programs over the period of six months, a year or five years. It helps the organization in getting a clear view of the type of work that is to be performed.
Marketing Plan: It involves the task of creating plans for the marketing of new products, which an organization decides to manufacture. This plan provides
a method for distributing, promoting and pricing a product or service in the market.
Operations Plans: All business units include operation plan as an integral part of business plan. It is very useful in describing the flow of goods or services from the manufacturer to consumer. It can also be used by retailers, whole sellers and service providers to provide a sequence of steps required for the execution of a specific business transaction.
Financial Plan: It is also an important part of the business plan. This plan helps to identify and evaluate different type of potential investments opportunities and commitment required for setting up a new venture. It can also be used to clarify, whether the business plan is feasible or not.
Risk Assessment: Risk assessment is done to identify risks and alternative arrangements that can be used to meet the goals and objectives of a business unit. In the first step of risk assessment, the entrepreneur should identify the risks, which are associated with the set up of business venture. After identifying the risks, the entrepreneur should determine the ill affects of risks. After that entrepreneur should try to identify or develop a strategy that can be used for preventing and minimizing the scope of the risk.
Venture Description: Description of a venture provides the details about the product, services and operations of a newly set up venture. Description of venture is very useful for investors, since it provides the size and scope of business venture.
Industrial and Environment Analysis: Industrial & environmental analysis involves identifying and evaluating external factors that could impact the business plan. It is very useful for identifying trends and changes occurring in the national and international economies.
Following are the examples of external environmental factors:- Culture- Economy- Technology- Legal Concerns
(C) Identifying Resources
The third step in the process is the identification of resources. These resources may be financial resources or physical resources such as raw materials. The identification of resources starts with the appraisal of an entrepreneur’s present resources. While identifying resources, entrepreneurs must take sure of the amount and variety of resources required. Entrepreneurs must also evaluate the risk associated with inappropriate resources. Resources required by a growing enterprise can be classified in to the following two categories:
Tangible Resources: Tangible resources are those resources, which can be quantified and are visible. Tangible resources include financial resources, organizational resources, physical resources and technological resources.
Intangible Resources: Intangible resources are those resources, which are partially visible such as human resources, innovation resources and reputation resources.
The management of available resources is also essential for a growing enterprise. Management of resources involves identification, allocation and relocation of resources
in order to perform a specific task. Resources not only include raw materials or equipments but also the employees working in the organization and the place where it is located. The resources of an enterprise can ultimately lead to a strategic advantage for it if they possess four characteristics, that is, if these resources are available, rare, costly to imitate and non-substitutable.
(D) Managing an Enterprise: This is the last step of the entrepreneurial process. After identifying resources, it is the responsibility of the entrepreneur to implement them in an efficient manner. This phase also involves identifying and managing operational problems of the enterprise. In order to deal with the potential operational problems, most
of the entrepreneurs implement the process of establishing a control system in their enterprise. Control system allows the entrepreneurs to identify problems areas very quickly. Control system also provides a mechanism for resolving these problem areas.