Introduction to Entrepreneurship

PRINCIPLES OF ENTREPRENEURSHIP

There is tremendous interest in entrepreneurship around the world

According to the GEM 2005 study, about 330 million people, or 14% of the adults in the 35 countries surveyed, are involved in forming new businesses

What is Entrepreneur?
The term 'Entrepreneur' has been derived from a French word 'Entreprendre' meaning to undertake certain activities Entrepreneur has to perform two types of functions which are explained here with the help of pictures given in next slides.

Organization Function & Risk Bearing Function

Functions of an entrepreneur

Functions
Factors of production viz. land, labour and capital are scattered at different places. All these factors have to be assembled together. This work is done by enterprise through entrepreneur. This is an 'Organization Function'. Organization function is the work of bringing the required factors together and making them work harmoniously. Entrepreneur has to bear risks and uncertainties. For facing uncertainties he may get profit or may incur loss. This is the 'Risk Bearing Function' and entrepreneur is the risk bear

Definition of Entrepreneur
Difference Between an Inventor and an Entrepreneur
An inventor creates something new. An entrepreneur puts together all the resources needed the money, the people, the strategy, and the risk-bearing ability to transform the invention into a viable business

An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative

Basics of Entrepreneur
Organization

Growth

Innovation

Vision

Risk

Skill

Enterprise

Urge

Management

What is Entrepreneurship?
Entrepreneurship Defined
Entrepreneurship is the process by which individuals pursue opportunities without regard to the resources they currently control. The essence of entrepreneurial behavior is identifying opportunities and putting useful ideas into practice. The set of tasks called for by this behavior can be accomplished by either an individual or a group and typically requires creativity, drive, and a willingness to take risks.

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"

Why Become an Entrepreneur?

There are three primary reasons that people become entrepreneurs and start their own firms

Desire to be their own boss Desire to pursue their own ideas Financial rewards

Successful Entrepreneurs

Characteristics of Successful Entrepreneurs

Successful entrepreneurs have a lot of things in common:
Confidence Determination Vision Creativity and passion to name a few.

They also tend to be people who inspire, and this is most notably true when said successful entrepreneurs company was designed to inspire

Characteristics of Successful Entrepreneurs

Four Primary Characteristics of Successful Entrepreneurs

Characteristics of Successful Entrepreneurs

Passion for the Business
The number one characteristic shared by successful entrepreneurs is a passion for the business. This passion typically stems from the entrepreneurs belief that the business will positively influence peoples lives.

Product/Customer Focus
A second defining characteristic of successful entrepreneurs is a product/customer focus. An entrepreneurs keen focus on products and customers typically stems from the fact that most entrepreneurs are, at heart, craftspeople.

Characteristics of Successful Entrepreneurs

Tenacity Despite Failure
Because entrepreneurs are typically trying something new, the failure rate is naturally high. A defining characteristic for successful entrepreneurs is their ability to persevere through setbacks and failures.

Execution Intelligence
The ability to fashion a solid business idea into a viable business is a key characteristic of successful entrepreneurs.
The ability to translate thought, creativity, and imagination into action and measurable results is the essence of execution intelligence.

Entrepreneurial traits
Although no one is born to be an entrepreneur, there are common personality traits and characteristics of successful entrepreneurs

Achievement motivated Alert to opportunities Creative Decisive Energetic Has a strong work ethic Is a moderate risk taker Lengthy attention span

Optimistic disposition Persuasive Promoter Resource assembler Self-confident Tenacious Tolerant of ambiguity Visionary

Qualities / Skills of an Entrepreneur

To be a successful and ideal entrepreneur, one should have certain qualities or skills as given below 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.

Entrepreneur vs. Manager

Behavioral Differences
The typical entrepreneur wants to "be in control" of his life (which is often the reason why he started the business), of his business and especially of his employees. The professional manager, on the other hand, enters a company which needs to delegate authority, since it has reached the stage in its development where the entrepreneur can no longer "do it all himself".

Entrepreneur vs. Manager

Management Style
The entrepreneurial management style is very demanding, leaving very little room for error, and none at all for actual failures, since in most cases the business is a "one man show", even if there are other employees. The professional manager, however, must be tolerant of failure (and see it as a basis for learning) and develop an administrative team, since a basic assumption is that responsibility in the organization must pass from the "all-knowing" entrepreneur to people who still have to learn about the business.

Entrepreneur vs. Manager

The Moving Force
Entrepreneurial management is characterized by concepts such as "entrepreneurship", "creativity", "innovation", and so on, indicators of the desire to create "something from nothing". Professional management is characterized by concepts such as "order", "organization", "procedures", and so on, indicating the desire to organize and maintain what exists.

Entrepreneur vs. Manager

Growth
Entrepreneurial management is noted for its ability to react quickly and effectively to new business opportunities. This ability is the foundation for rapid growth of the company in its entrepreneurial stage. Professional management is noted for medium and long term strategic planning, which leads to controlled growth of the company during the process of establishment.

Entrepreneur vs. Manager

Organizational Structure
The entrepreneurial organization is characterized by its informal, flexible structure, which allows it to adapt to changes required by its rapid growth. Professional management, on the other hand, requires a formal and fairly rigid organizational structure, which leaves no room for rapid reactions to business opportunities, but protects the organization from sudden collapse

Entrepreneur vs. Manager

Decision-Making
The entrepreneur usually makes decisions, even those of critical importance for his business, on the basis of his own personal intuition and "gut feelings". The professional manager makes decisions after collecting detailed information and reaching operative conclusions, while relying on experts both from within and outside the organization

Entrepreneur vs. Manager

Attitude to Risk
The myths describe entrepreneurs as "wild risktakers", although many studies have shown that in fact the typical entrepreneur is very good at assessing risks. On the other hand, the professional manager, who sees his task as strengthening and maintaining the company, is naturally afraid of risks and tries to maintain the status quo.

Entrepreneur vs. Manager

Characteristic Behavior Characterized by Management Style Driving Force Organizational Growth Organization Structure Decision-Making Definition of Aims Attitude to Money Attitude to Risk Organizational Culture Entrepreneur Desire for Control One-Man Show Creativity - Innovation Rapid Reaction Informal, Flexible Intuitive In terms of "Vision" A By-Product Calculated Risks "Entrepreneurial Culture" Manager Delegation of Authority Management Team Establish and Preserve the Status Quo Strategic Planning Organized Collect Information and Seek Advice In Commercial Terms Measure of Success Avoidance of Risks "Management Culture"

Entrepreneur vs. Manager

Edison Vs Jeff Immelt Jobs Vs Tim Cook

Entrepreneur vs. Intrapreneur

high risk taker Independent works from outside Failure is high but rewards of success are more not a risk taker dependent on Enterprise works with or within the org The costs of failure too high, and the rewards of success are too low

Entrepreneurial decision process

Entrepreneurial decision process

Stages of the decision-making process

Recognition Diagnosis Search Design Screen Evaluation / choice Authorization

Entrepreneurship and economic development

Economic development, achieved through productivity growth Higher productivity leads to improved economic outcomes Entrepreneurial efforts have been found to generate a wide range of economic benefits, new businesses, new jobs, innovative products and services, and increased wealth for future community investment

Entrepreneurship and economic development

Ethics & social responsibility

The Golden Rule: Act in a way you would want others to act toward you. Act in a way that results in the greatest good for the greatest number. Act in such a way that the action taken under the circumstances could be a universal law, or rule, of behavior. Take actions that would be viewed as proper by a disinterested panel of professional peers. Always ask, "Would I feel comfortable explaining to a national TV audience why I took this action? Ask whether the proposed action or decision is legal. Established laws are generally considered minimum standards for ethics. Ask whether you can answer "yes" to the following questions as they relate to the decision: Is the decision truthful? Is it fair to all concerned? Will it build goodwill and better friendships? Will it be beneficial to all concerned?

Ethics

Social responsibility
Social responsibility arises from social power. Business shall operate as an open system, with open receipt of inputs from society and open disclosure of its operation to the public. The social costs and benefits of an activity, product, or service shall be thoroughly calculated and considered in deciding whether to proceed with it. Social costs related to each activity, product, or service shall be passed on to the consumer. Business institutions, as citizens, have the responsibility to become involved in certain social problems that are outside their normal areas of operation.

Social responsibility

Opportunities for entrepreneurs

Water IT & Telecom Healthcare Education Alternative Energy Retail Hospitality & Travel Entertainment Real Estate Rural Development Transportation & Logistics Infrastructure

Women as entrepreneur
Kiran Mazumdar-Shaw, Chairman & Managing Director of Biocon Ltd., Ekta Kapoor, creative head of Balaji Telefilms Neelam Dhawan, Managing Director, Microsoft India Mallika Srinivasan, Director of TAFETractors and Farm Equipment Preetha Reddy, Managing Director of Apollo Hospitals

Women entrepreneurs

Women as entrepreneur
Women Entrepreneurs
There were 6.5 million women-owned businesses in 2002, the most recent year the U.S. Census Bureau collected business ownership data. That number is up 20% from 1997.

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