As you grow up you have to think about what you would like to do in order to
earn your living. If you look around you will find that different people are
doing different activities to earn money to look after their family and to lead a
decent life. They are choosing different careers based on their knowledge, and
experience. For young persons like you, there are two career alternatives:
a) wage-employment, i.e. taking a job and serving the boss for a monthly
salary
b) self-employment, i.e. to start any economic activity of your own for being
self-employed. In self-employment, once the activity grows it can also
generate wage-employment for others, then it is called entrepreneurship.
The person who practises entrepreneurship is called an entrepreneur.
An entrepreneur is defined as “person in effective control of commercial
undertaking; one who undertakes a business or an enterprise”.
The economic activity in self-employment may be a small business, a
manufacturing unit or a service-cum-repair unit. Individuals generally choose
self-employment for the following reasons:
i) Self-employment provides a solution to the problem of unemployment.
Unemployment exists to a large extent in rural and urban areas and among
the educated and uneducated in India. Hence, the need to promote selfemployment.
ii) One self-employed individual can also offer employment to others. The
best scope for self-employment exists in a variety of small business like,
retail trade, small stores, repair-cum-servicing units, newspaper stalls,
dealership-based business activities, small catering places, franchise-based
soft-drink vending, ice-cream and small servicing stations, small
manufacturing units, etc.
What Is The Need For Entrepreneurship
Let us understand the need for and significance of entrepreneurship.
• Increases national production: More and more entrepreneurs are developed they contribute directly to
product and process development which in turn increases national
economy. For example, more entrepreneurs in the area of food processing
sector would be able to maximize the uses of raw material, and the
products in food industries would increase.
product and process development which in turn increases national
economy. For example, more entrepreneurs in the area of food processing
sector would be able to maximize the uses of raw material, and the
products in food industries would increase.
• Balanced area development: As more entrepreneurs are developed both in rural and urban sectors, it will
decrease the dispersal of the people from rural areas to urban areas. It will
also help the rural industries to grow as well as the industrially backward
areas in the country.
decrease the dispersal of the people from rural areas to urban areas. It will
also help the rural industries to grow as well as the industrially backward
areas in the country.
• Dispersal of economic power:
It is a process of empowering people. People can have “power” either
through muscle, status or money. Entrepreneurship helps to balance
“power” through participation, economic gain and position in the society.
It is a process of empowering people. People can have “power” either
through muscle, status or money. Entrepreneurship helps to balance
“power” through participation, economic gain and position in the society.
• Reinvestment of profit for the welfare of the area of profit generation:
It has been observed that entrepreneurial community or people in a
particular area would reinvest their profit for the development of roads,
infrastructure as well as for the welfare of the people. Take for example, what contributions have been made by the well-known entrepreneurs like
Tata’s, Birla’s and Reliance.
It has been observed that entrepreneurial community or people in a
particular area would reinvest their profit for the development of roads,
infrastructure as well as for the welfare of the people. Take for example, what contributions have been made by the well-known entrepreneurs like
Tata’s, Birla’s and Reliance.
• Development is a function of motivation and human resource:
Any development requires participation of human resources. These people
have to be motivated for contributing towards development.
Entrepreneurship truly contributes to development through the participation
of people who are motivated, energetic and have a concern for growth.
Any development requires participation of human resources. These people
have to be motivated for contributing towards development.
Entrepreneurship truly contributes to development through the participation
of people who are motivated, energetic and have a concern for growth.
• Entrepreneurial awareness:
There is a need for creating mass awareness among the people whether
they are students, unemployed youth, artisans, retired personnel, or
housewives to be aware about entrepreneurship. More and more
entrepreneurs lead to economic development.
There is a need for creating mass awareness among the people whether
they are students, unemployed youth, artisans, retired personnel, or
housewives to be aware about entrepreneurship. More and more
entrepreneurs lead to economic development.
Benefits To The Self-employed
a) Self-employment offers perhaps the best opportunity for gainful use of
one’s own capabilities and time.
It is gainful because it generates income for the self-employed individual.
In short, one can earn livelihood based on self-employment.
one’s own capabilities and time.
It is gainful because it generates income for the self-employed individual.
In short, one can earn livelihood based on self-employment.
b) Self-employment develops initiative and ability to plan and manage
business activity on the part of the individual.
Thus, it offers scope for development of the individual.
business activity on the part of the individual.
Thus, it offers scope for development of the individual.
c) In a self-employment situation one learns many things ‘on the job’ because
one has to take all the decisions and also manage the business.
One learns and develops through self-employment.
one has to take all the decisions and also manage the business.
One learns and develops through self-employment.
d) In self-employment one can grow and expand one’s own business and be
innovative.
innovative.
One learns to be innovative and growth-oriented. Thus, self-employment
develops initiative and ability to plan, decide and manage one’s own
business. The saying “self-help is the best help” applies here also very
well.
develops initiative and ability to plan, decide and manage one’s own
business. The saying “self-help is the best help” applies here also very
well.
Who Is An Entrepreneur?
Once you are self-employed you may like to grow and expand so as to become
big to achieve great heights in life, one needs to take initiative and be on one’s
own. If you look around you will find that all those who have become rich and
have earned a big name have become so by starting their own enterprises rather
than by seeking jobs.
big to achieve great heights in life, one needs to take initiative and be on one’s
own. If you look around you will find that all those who have become rich and
have earned a big name have become so by starting their own enterprises rather
than by seeking jobs.
In this way, the educated person does not become a
burden on the nation but rather builds the nation by starting a small enterprises,
which may be a small industrial enterprise to start with, but over a period of
time it becomes a large industry. These are the people who are called
entrepreneurs.
burden on the nation but rather builds the nation by starting a small enterprises,
which may be a small industrial enterprise to start with, but over a period of
time it becomes a large industry. These are the people who are called
entrepreneurs.
i) Becoming an Entrepreneur would mean to own one’s tasksjobs, organize
activities, and manage and run an enterprise assuming the risk of a
business.
activities, and manage and run an enterprise assuming the risk of a
business.
ii) Being an entrepreneur would mean independence and having control over
one’s own life?
one’s own life?
iii) Being an entrepreneur would mean being innovative and reaching towards
excellence.
excellence.
iv) Being an entrepreneur would mean creating job opportunities for others.
v) Being an entrepreneur would also mean sensing economic opportunities.
Entrepreneurs have specific qualities; they have special strengths which they
draw upon for their foray into business. If you want to start your own
enterprise and make it a success, you will have to play different roles at
different times and at different stages of the growth of your enterprise. Let us
understand some of the special qualities that an entrepreneur needs to develop.
draw upon for their foray into business. If you want to start your own
enterprise and make it a success, you will have to play different roles at
different times and at different stages of the growth of your enterprise. Let us
understand some of the special qualities that an entrepreneur needs to develop.
Setting Challenging Goal – Risk Taking
Risk-taking is an important aspect of entrepreneurial life. Entrepreneurs are
calculated risk-takers. They do not aim at goals that can be very easily
accomplished. They like challenges.
calculated risk-takers. They do not aim at goals that can be very easily
accomplished. They like challenges.
They also do not aim at tasks that are
very difficult to accomplish, as they would enjoy a sense of success attained
only after accomplishing a challenging goal. They are moderate risk-takers.
Moderate or calculated risk-taking involves a number of processes, stated
below:
very difficult to accomplish, as they would enjoy a sense of success attained
only after accomplishing a challenging goal. They are moderate risk-takers.
Moderate or calculated risk-taking involves a number of processes, stated
below:
a) Understanding the situation
b) Gathering as much information as possible
c) Assessing one’s own resources
d) Setting challenging goals for oneself, on the basis of the information and
resources
resources
e) Testing one’s own abilities
f) Modifying the goals set on the basis of previous experience (one’s own and
others).
others).
To be personally responsible for the risks involved in the establishment of an
enterprise may be considered as one of the important dimensions of
entrepreneurial behaviour. Entrepreneurs have, however, certain characteristic
attitudes towards risk.
enterprise may be considered as one of the important dimensions of
entrepreneurial behaviour. Entrepreneurs have, however, certain characteristic
attitudes towards risk.
Generally, the choice of an occupation is because of the
‘fear of failure’. However, in the choice of an entrepreneur, the fear of failure
forms the least important consideration. The entrepreneur bears the risk of
launching a new business. Nonetheless, while opting for a risk, he does not
like to play the gambler.
‘fear of failure’. However, in the choice of an entrepreneur, the fear of failure
forms the least important consideration. The entrepreneur bears the risk of
launching a new business. Nonetheless, while opting for a risk, he does not
like to play the gambler.
The Entrepreneur and the Gambler
The difference between a gambler and an entrepreneur needs to be clearly
understood for a proper appreciation of entrepreneurial behaviour.
When a gambler takes risks, the person is primarily concerned with the pay off
which is solely determined by the result of a “chance”. The gambler operates
without using the earlier experience. In gambling, such event is independent of
any pay off.
understood for a proper appreciation of entrepreneurial behaviour.
When a gambler takes risks, the person is primarily concerned with the pay off
which is solely determined by the result of a “chance”. The gambler operates
without using the earlier experience. In gambling, such event is independent of
any pay off.
On the other hand, even though the entrepreneur also stakes and hopes, he
continuously intervenes to influence the outcome. In such a situation, the
person is aware that any intervention, even in the most certain situations,
makes all the difference to the outcome.
continuously intervenes to influence the outcome. In such a situation, the
person is aware that any intervention, even in the most certain situations,
makes all the difference to the outcome.
Such awareness is confirmed by
experience. It would be appropriate to say that an entrepreneur takes only such
risks where one cannot control the outcome. The feelings or awareness, which
is confirmed that the outcome can be controlled by interventions, marks the
demarcating line between gambling and the calculated risk-taking.
experience. It would be appropriate to say that an entrepreneur takes only such
risks where one cannot control the outcome. The feelings or awareness, which
is confirmed that the outcome can be controlled by interventions, marks the
demarcating line between gambling and the calculated risk-taking.
In gambling, learning is not possible, whereas entrepreneurial risk-taking is
mainly governed by learning. In the former, it is not possible to calculate longterm objective probabilities or odds. Such objective probabilities may be
almost denied or not available to the entrepreneurial activity.
mainly governed by learning. In the former, it is not possible to calculate longterm objective probabilities or odds. Such objective probabilities may be
almost denied or not available to the entrepreneurial activity.
Only the denial
of the objective calculation of risk, however, does not make all the difference
between gambling and an entrepreneurial venture. The sense of control, the
possibility of learning, and the presence of moderate risk and subjectivity lead
to entrepreneurial activity.
of the objective calculation of risk, however, does not make all the difference
between gambling and an entrepreneurial venture. The sense of control, the
possibility of learning, and the presence of moderate risk and subjectivity lead
to entrepreneurial activity.
Moderate Risk Taking
The concept of taking a challenge or stretching explains better the concept of
moderate risk-taking. One takes a challenge if the goal is personally
meaningful, the outcome is dependent on one’s effort, and the goal is a little
beyond one’s capabilities, holding in store a lurking possibility of even a
failure. The same is true of the concept of’ stretching’.
moderate risk-taking. One takes a challenge if the goal is personally
meaningful, the outcome is dependent on one’s effort, and the goal is a little
beyond one’s capabilities, holding in store a lurking possibility of even a
failure. The same is true of the concept of’ stretching’.
One is likely to stretch
oneself if the goal appears a little beyond one’s reach, if it is personally
meaningful, i.e. if it has any personal marginal utility, and its attainment
largely depends on one’s effort. Stretching results from the hope of success.
oneself if the goal appears a little beyond one’s reach, if it is personally
meaningful, i.e. if it has any personal marginal utility, and its attainment
largely depends on one’s effort. Stretching results from the hope of success.
On the other hand, a person with a low hope of success or a high fear of failure
is likely to choose goals, which are well within one’s capacity, thereby
ensuring a low probability of failure. In the latter case, the concern is not
about success or achievement, but about non-failure.
is likely to choose goals, which are well within one’s capacity, thereby
ensuring a low probability of failure. In the latter case, the concern is not
about success or achievement, but about non-failure.
Very often, by congenital
standards, these people appear to be succeeding. In effect, they have chosen to
operate well within their natural capacity. A person operating from the hope of
success, however, is likely to increase the capacities because of inclination
towards stretching.
standards, these people appear to be succeeding. In effect, they have chosen to
operate well within their natural capacity. A person operating from the hope of
success, however, is likely to increase the capacities because of inclination
towards stretching.
Sensing Opportunities
Let us understand yet another important problem faced in entrepreneurial life,
“Sensing Opportunity” what is opportunity? It may be a chance to do
something new; it may also be a way of getting something for nothing? or it
may be a job or admission to a school or college.
“Sensing Opportunity” what is opportunity? It may be a chance to do
something new; it may also be a way of getting something for nothing? or it
may be a job or admission to a school or college.
While these are, no doubt,
opportunities, there is another type of opportunity that exists in our
environment, which we most often fail to notice. We call it by the general
term: problem Problems, pose a challenge to entrepreneurs, and in solving
them, they find opportunities. For an entrepreneur it is like saying “If you
have a problem, then it is my opportunity”.
opportunities, there is another type of opportunity that exists in our
environment, which we most often fail to notice. We call it by the general
term: problem Problems, pose a challenge to entrepreneurs, and in solving
them, they find opportunities. For an entrepreneur it is like saying “If you
have a problem, then it is my opportunity”.
Opportunities for launching new enterprises exist in the environment
everywhere but all of us are not able to perceive them. Even if we do, we only
see an opportunity in retrospect. The good idea was there but it is usually a
case of “Why didn’t I think of it first?” Entrepreneurs however, perceive
opportunities quickly, synthesize the available information and analyze emerging patterns that escape others.
everywhere but all of us are not able to perceive them. Even if we do, we only
see an opportunity in retrospect. The good idea was there but it is usually a
case of “Why didn’t I think of it first?” Entrepreneurs however, perceive
opportunities quickly, synthesize the available information and analyze emerging patterns that escape others.
They are people with a vision, capable of
persuading others such as customers, partners, employees and suppliers to see
the opportunity, share it and support it. For them the opportunity exists, as we
have seen before, in the environment in the form of needs and problems of
people and society. After spotting the opportunity, they evolve a strategy to
find a creative solution to the problem or need.
persuading others such as customers, partners, employees and suppliers to see
the opportunity, share it and support it. For them the opportunity exists, as we
have seen before, in the environment in the form of needs and problems of
people and society. After spotting the opportunity, they evolve a strategy to
find a creative solution to the problem or need.
Apart from perceiving an opportunity that already exists in the environment, it
is also possible to create or craft business opportunities. Many great inventions
like the microwave and the mobile phones are the examples of created
opportunities.
is also possible to create or craft business opportunities. Many great inventions
like the microwave and the mobile phones are the examples of created
opportunities.
They are born out of fantasies of entrepreneurs about products
or services they would love to have in their lives. It requires lot of ideas which
can be generated. We will now try to understand how these ideas can be
generated and what are its sources?
or services they would love to have in their lives. It requires lot of ideas which
can be generated. We will now try to understand how these ideas can be
generated and what are its sources?
Sources of Idea
By following different ways for generating ideas an entrepreneur collects a
number of ideas. The process of generation of ideas can be streamlined by
developing awareness for different ‘Idea fields’. This helps the entrepreneur in
enlarging the scope of thinking, at the same time structuring the ideas
according to convenient frames of reference. Thus idea fields can be described
as convenient frames of reference for streamlining the process of generation of
ideas.
number of ideas. The process of generation of ideas can be streamlined by
developing awareness for different ‘Idea fields’. This helps the entrepreneur in
enlarging the scope of thinking, at the same time structuring the ideas
according to convenient frames of reference. Thus idea fields can be described
as convenient frames of reference for streamlining the process of generation of
ideas.