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
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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
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
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.