ENTREPRENEURSHIP DEVELOPMENT& BUSINESS PLAN

MSME-TECHNOLOGY DEVELOPMENT CENTRE(CENTRAL FOOTWEAR TRAINING INSTITUTE, AGRA)

Introduction

An entrepreneur is one of the important segments of economic growth. He plays a vital role in the economic development of a country. Economic development of a country depends primarily on its entrepreneurs. Basically, an entrepreneur is a person who is responsible for setting up a business or an enterprise. In fact, he is one who has the initiative skill for innovation and who looks for high achievements. He is a catalytic agent of change and works for the good of people. He looks for opportunities, identifies, opportunities and seizes opportunities mainly for economic gains. Entrepreneurs are action oriented, highly motivated individuals who take risks to achieve goals.

Entrepreneurship involves mobilizing the resources and combining them to initiate change in production. It is the purposeful activity of an individual or a group of individuals undertaken to initiate, maintain or increase profit by production or distribution of economic goods and services. It is very often associated with adventurism, risk bearing, innovating new idea in production, new usage for men, money and materials, etc. It is the mental attitude of the entrepreneur to take the calculated risks with a view to attain certain specific objectives.

Evolution of the concept of Entrepreneur

The world entrepreneur has been taken from the French language where it cradled and originally meant to designate an organizer of musical or other entertainments. Oxford English Dictionary (in 1897) also defined an entrepreneur in similar way as the director or a manager of a public musical institution one who gets-up entertainment, especially musical performance. In the early 16 century it was applied to persons engaged in military expeditions. It was extended to cover constructions and other civil engineering activities in the 17 century. It was only in the 18 century that the word was used to refer to economic activities. Since then, the term entrepreneur is used in various ways and various views. These views are broadly classified into three groups, viz., risk-bearer, organizer and innovator.

Meaning and Definitions

The English term Entrepreneur has been derived from the French Verb enterprendre which means to undertake. Entrepreneurship is an elusive concept which is difficult to define. Today, the term entrepreneurship has several meanings which include adventurism, risk taking, thrill seeking and innovation. Entrepreneurs play a significant role in the economic development of a country. Therefore, entrepreneurship development has now become vital and essential to the economic stability of the developing countries like India, where the problem of unemployment of the educated youths has been pausing a very severe and complex situation. An entrepreneur is a person who is able to express and execute the urge, skill, motivation and innovative ability to establish a business or industry of his own, either alone or in collaboration with his friends.

Definition of entrepreneur

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 intermediately between capital and lab our.

Entrepreneur may be defined as an individual or a group of individuals who tries to create something new, who organizes production and undertakes risk involved in the establishment and operation of a business enterprise. The term entrepreneur is not confined to those who start a new business and extends to those who seek out new opportunities and then combine the factors of production to exploit the perceived opportunities.Thus, an entrepreneur is an economic leader who possesses the ability to recognize opportunities for the successful introduction of a new product, new source of supply, new technique of production, etc. and who assembles the necessary resources and organizes them into a going concern.

Definitions of Entrepreneurship

The term entrepreneurship is used in various ways with different meanings. Let us examine a few definitions put forward by some scholars who have conducted elaborate studies and authoritarian discussions on entrepreneurship. These definitions shall enable us to have an idea about the multifarious meanings of the term.

Higgins, in his book, The Economic Development has said, Entrepreneur- ship is meant the function of seeking investment and production opportunity,organising an enterprise to undertake a new production process, raising capital, hiring lab our, arranging the supply of new materials, finding site, introducing new technique and commodities, discovering new sources of raw materials and selecting top managers of day to day operations of the enterprise.

Inference:

In this definition entrepreneurship is picturised as a function in which an economic activity is dealt with, risk is undertaken willingly, something is created a new, and resources are organized and co-ordinate.

Jaffery A. Timmons has defined entrepreneurship as the ability to create and build something from practically nothing. Fundamentally, a human creative activity, it is finding personal energy by initiating, building and achieving an enterprise or organization rather than by just watching, analyzing or describing one. It requires the ability to take calculated risk and to reduce the chance of failure. It is the ability to build a founding team to complement to entrepreneurs skills and talents. It is the knack for sensing an opportunity where others see chaos, contradictions and confusion. It is the know-how to find, marshal and control resources and to make sure the venture does not run out of money when it is needed most.

Entrepreneurship is the practical ability to create and build up something a new from nothingness. Fundamentally it is an act of human creativity. It is a process of finding out personal an individual energy to initiate and build up an enterprise or organization and thereby to realize a much longed for objective. Merely, observing, analyzing or interpreting a process is not entrepreneurship. It requires essentially the ability to face risk and to minimize its impact. Entrepreneurship can also be regarded as the ability to organize a team which is capable to materialize the skills and the innovative urge of the entrepreneur.Entrepreneurship is also the dexterity smell out opportunity in situations where others find confusions and contradictions. It can also be described as the know- how to seek out rare resources, to utilize them intelligently and to make arrangements to save the enterprise from breakdown due to the scarcity of finance. From the definitions referred to above, we can arrive at the conclusion that entrepreneurship is a creative response to environment and a skill to identify an economic opportunity and to exploit that opportunity in a most beneficial manner.

Entrepreneur Vs Entrepreneurship

Entrepreneur refers to: Entrepreneurship refers to:Visualiser VisionOrganizer OrganizationInitiator InitiativeInnovator InnovationImitator ImitationMotivator MotivationPlanner PlanningDecision-maker Decision-makingRisk-bearer Risk-bearing

The Essential Characteristics of Entrepreneurship

Being a concept having diversified dimensions, entrepreneurship must have some essential characteristics which are summarized here under:

1.InnovationEntrepreneurship is creative also in the sense that it involves innovation- introduction of new products, discovery of new markets and sources of supply of inputs, technological breakthroughs as well as introduction of newer organizational forms for doing things better, cheaper, faster and, in the present context, in a manner that causes the least harm to the ecology/environment. An entrepreneur attempts to perform his activities in a new better way.

2. Strong desire to reap benefits. Two desires act as the motivational forces behind the economic behavior are known as entrepreneurship. They are (i) The desire to earn profits, and(ii) The desire for glory.

These two motivational forces depend greatly on the mental attitude of the entrepreneur. On the basis of these motivational forces entrepreneurs can be classified into two categories; viz. entrepreneurs who strive for earning private profits and entrepreneurs who desire to earn a respectable position in the society. Psychologists view that the second type of entrepreneurs hold a more dignified position with society than the entrepreneurs who belong to the first category.

3. Organisation of Production: Production, implying creation of form, place, time personal utility, requires the combined utilization of diverse factors of production, land, labour, capital and technology. Entrepreneur, in response to a perceived business opportunity mobilizes these resources into a productive enterprise or firm. It may be pointed out that the entrepreneur may not be possessing any of these resources; he may just have the idea that he promotes among the resource providers. In an economy with a well-developed financial system, he has to convince just the funding institutions and with the capital so arranged he may enter into contracts of supply of equipment, materials, utilities (such as water and electricity) and technology. What lies at the core of organization of production is the Knowledge about availability and location of the resources as well as the optimum way to combine them. An entrepreneur needs negotiation skills to raise these in the best interests of the enterprise. Organisation of production also involves product development and development of the market for the product. Besides, entrepreneur may be required to develop even the sources of supply of requisite inputs. For example, whether it is a matter of putting together an automobile manufacturing unit or manufacture of burger/pizza, besides cultivating a market and developing products to suit its tastes and preferences there would be a need to develop a pool of suppliers of the diverse components or elements that go into their manufacture.

4. Management Skill and Leadership Quality

B. F. Hoselitz, in his book, entitled Sociological aspects of Economic Growth, opines that management skill and leadership quality are the two essential qualities that a successful entrepreneur should possess. According to him Financial Skill has only a secondary importance. An entrepreneur must be an efficient manager and an able leader at the same time. An entrepreneur shall be able to delegate responsibilities to his subordinates in such a way as to materialize the proposed objectives of his concern and to motivate them by his leadership so as to achieve the desired goal.

5. Individual, Psychological and Social Characteristics

In developing and under-developed societies an entrepreneur is often viewed with suspicion. The portrait of an entrepreneur becomes defective in a society that views him as an individual who exploits the society for his personal gains. This negative outlook is an impediment to entrepreneurship and economic development through entrepreneurial development. An entrepreneur must be able to bring about favorable variations in the inverse out look of the society by strength of character, creating an image of a person who attributes more importance to social benefits than to personal gains and also by putting on the outfit of a social benefactor. He can easily do so by developing an attractive personality.

The psychological and sociological characteristics of entrepreneurship are almost equal. The psychological need to reap benefits is inborn. Although this aim is purely individualistic, when it gians the halo of social good, entre-preneurship becomes a success. Entrepreneurship becomes meaningful when the common goal of social goods gets mixed up with the urge for profit earning. The status of entrepreneurship is increased when its individualistic, psychological and sociological characteristics becomes mutually complementary.6. Economic activity

Entrepreneurship is primarily an economic function because it involves the creation and operation of an enterprise. It is basically concerned with the production and distribution of goods and services.

7. Gap-filling FunctionThe gap between human needs and the available products and services gives rise to entrepreneurship. An entrepreneur identifies this gap and takes necessary steps to fill the gap. He introduces new products and services, new methods of production and distribution, new sources of inputs and new markets (both domestic and international) for this purpose.

8. Risk-bearingRisk in an inherent and inseparable element of entrepreneurship. An entrepreneur guarantees rent to the landlord , wages to employees ,and interest to investors in the hope of earning profit. He assumes the uncertainty of future. In the pursuit of profits there is every possibility of loss.

9. Dynamic ProcessEntrepreneurship is a dynamic process. Entrepreneurs thrive on change in the environment which bring useful opportunities for business. Flexibility is the hall mark of a successful entrepreneur.Thus, entrepreneurship is a multi-dimensional concept. It is both an art as well as a science. An entrepreneur should have good intelligence, clear-cut objectives, capacity to guard business secrets, capacity to interact with people, technical knowledge, self-confidence, etc. for reaping a good harvest in the field of business.

Common Entrepreneurial Traits (Qualities of a successful Entrepreneur)

Entrepreneur is an organizer who combines the various factors of production and produces a socially valuable products and sells them in the market. He should be a pioneer, a captain of the industry. The modern entrepreneur is one who detects and evaluates a new situation in his environment and directs the making of such adjustments in the economic systems as he deems necessary. A successful entrepreneur must possess the following traits:

1. Mental Ability: He should have good intelligence and ability to analyze business situations.

2. Clear-cut objectives: An entrepreneur should have clear cut objectives about the nature of business, type of products, markets, profit etc.

3. Capacity to Guard Business Secrets: Secrecy is one of the important aspects of a successful business. A good entrepreneur should have the capacity to guard business secrets.

4. Capacity to interact with people: One of the most important characteristics of an entrepreneur is his capacity to interact with people. He should have sufficient maturity and to be tactful in dealing with, suppliers, customers and those who deal with his business.

5. Effective communication: A good entrepreneur should be able to communicate his ideas, message and information effectively to others.

6. Technical knowledge: In modern times, the system production, marketing, management of personnel, finance etc. are all very complex. To cope with these, an entrepreneur should have sufficient technical knowledge.

7. Self-confidence: Only one with self confidence and who is courageous enough to take risk can succeed as an entrepreneur.

8. Motivator: As leader of business unit, he should be able to motivate the members to achieve the business goals.

9. Decision-maker: An entrepreneur should have the capacity to analyze the various aspects of the business and arriving at a decision.

10. Risk bearing: The entrepreneur will succeed only when he has the courage to take calculated risks.

11. Watching for opportunities: He, like a watch dog, looks for favorable business opportunity and takes necessary action accordingly.

12. Persistence: Follows the saying try and try again, you will succeed at last. He is always tenacious to make extreme efforts to get rid of the obstacles coming in the way of reaching the ultimate goal.

13. Quality conscious: He has always; put effort to excel better than the existing standards of performance.

14. Efficient monitoring: Personality supervises the work to ensure that the work is accomplished according to the standards set forth.

15. Concern for employees: He has to keep concern and take proper action to improve the welfare of the employees working in his enterprise.

Types of entrepreneur

Social entrepreneurAsocial entrepreneuris motivated by a desire to help, improve and transformsocial,environmental,educationalandeconomicconditions.Keytraitsand characteristics of highly effective social entrepreneurs include ambition and a lack of acceptance of thestatus quo or accepting the world "as it is". The social entrepreneur is driven by anemotionaldesire to address some of the big social and economic conditions in the world, for example,povertyand educational deprivation, rather than by the desire forprofit. Social entrepreneurs seek to developinnovativesolutions to global problems that can be copied by others to enact change. Social entrepreneurs act within a market aiming to create social value through the improvement of goods and services offered to the community. Their main aim is to help offer a better service improving the community as a whole and are predominately run as non profit schemes.

Serial entrepreneurA serial entrepreneur is one who continuously comes up with new ideas and starts new businesses.In the media, the serial entrepreneur is represented as possessing a higher propensity for risk, innovation and achievement.

Lifestyle entrepreneurA lifestyle entrepreneur places passion beforeprofitwhen launching a business in order to combine personal interests and talent with the ability to earn a living. Manyentrepreneurs may be primarily motivated by the intention to make their business profitable in order to sell toshareholders. In contrast, a lifestyle entrepreneur intentionally chooses abusiness modelintended to develop and grow their business in order to make a long-term, sustainable and viable living working in a field where they have a particular interest, passion, talent, knowledge or high degree of expertiseA lifestyle entrepreneur may decide to becomeself-employedin order to achieve greater personal freedom, more family time and more time working on projects or business goals that inspire them. A lifestyle entrepreneur may combine a hobby with a profession or they may specifically decide not to expand their business in order to remain in control of their venture. Common goals held by the lifestyle entrepreneur include earning a living doing something that they love, earning a living in a way that facilitates self-employment, achieving a goodwork/life balanceand owning a business without shareholders Many lifestyle entrepreneurs are very dedicated to their business and may work within thecreative industriesortourism industry,where a passion before profit approach toentrepreneurship often prevails. While many entrepreneurs may launch their business with a clearexit strategy, a lifestyle entrepreneur may deliberately and consciously choose to keep their venture fully within their own control. Lifestyleentrepreneurshipis becoming increasing popular as technology providessmall businessowners with the digital platforms needed to reach a largeglobal market lifestyle entrepreneurs, typically those between 25 and 40 years old, are sometimes referred to as Treps.

Cooperative entrepreneurA cooperative entrepreneur doesn't just work alone, but rather collaborates with other cooperative entrepreneurs to develop projects, particularly cooperative projects. Each cooperative entrepreneur might bring different skill sets to the table, but collectively they share in the risk and success of the venture.

In the initial stages of economic development the motivation of the entrepreneurs to take imitative was completely less. As development started gathering momentum the innovative urge and enthusiasm of entrepreneurs also began to rise up. Business environments began to speed up the emergence of enterprises. During the study programme about the agricultural sector of America, danhof classified entrepreneurs as follows.

1. Innovative entrepreneurs- adventurous entrepreneurs who attempt to put attractive possibilities in to practice are included under this type. They utilize achance introduce a new technique or a new product. They mobilize sufficient capital to start an enterprise befitting to this possibility. They also gather various production factors and select appropriate managers who are capable to run the enterprise forward. The type of entrepreneur defined by Schumpter can be included in this category. This type of entrepreneurs introduced and new production techniques and find out new markets for their products.

The lack of this type of this type of entrepreneurs , which is commonly found in developed countries, is the main reason for the economic backwardness of the developing countries. The backwardness of the industrial tradition of the developing countries paves way to the scarcity of innovative entrepreneurs.2. Initiative Entrepreneurs: - This type of entrepreneurs attempt to imitate innovative entrepreneurs. They imitate the techniques and the activities of others. The entrepreneurs of the developing countries belong to this type. The imitating trend of this type of entrepreneurs becomes suitable to taste and aptitude of the consumers because they (the consumers) prefer foreign goods.3. Fabian Entrepreneurs: - Entrepreneurs who attribute prefer to customs ,religions, Traditions and past habits, come under this category. Being shy and lazy this entrepreneurs are very cautious to accept changes and they view changes with suspicion. Being reluctant to face risk, they continuously follow the foot steps of their predecessors.4. Drone entrepreneurs: - These entrepreneurs are unwillingly to make any change in the production system, even if the causes losses repeatedly. They do not dare to derive from traditional lines. They never try to rise in accordance with the opportunities or to accept the warnings given by time even their products have lost marketability and the activities have been proved to be uneconomical. And the enterprise has been thrown out of the market, this type of entrepreneurs does not dare to react.

The following is a list of entrepreneurs who are not included in the definitions formulated by Danhof:1. Individual Entrepreneurs and Institutional EntrepreneursMajority of entrepreneurs belonging to the small scale industry sector are individual entrepreneurs. Entrepreneurs of this type are found in plenty in any country. They enjoy the benefits of flexibility, quick decision-making and the patronage of governments.Individual enterprises are not able to grow or develop beyond a limit. So, it becomes necessary to institutionalize enterprises when entrepreneurial skills are to be co-ordained, it becomes necessary for a team of entrepreneurs to work unitedly and the enterprise gains an institutional nature. The institutional nature of the enterprise becomes helpful in creating good results in deciding the course of the business, in expanding the activities and also in increasing the capital amount. Entrepreneurs working in the corporate business sector are institutional entrepreneurs.2. Inherited EntrepreneursSometimes people become entrepreneurs when they inherit family business. This type of entrepreneurs is found in plenty in India. Entrepreneurs of large scale business concerns like Tata, Birla, Dalmia etc., belong to this category.3. Technological EntrepreneursEducated young men and youths self-employment began to pour into thebusiness sector at a time when the problem of unemployment began to poise a severe threat to the society, and technical and scientific advancements started creating changes in the economic structure of the nation. These young men are being inspired by the golden opportunities to commercially exploit scientific inventions. When the Governments and the financial institutions came forward to assist these entrepreneurs have started contributing heavily to the growth of national economy, entrepreneurship has been accepted as one of the main objective of the Government.4. Instigated EntrepreneursPersons who have become entrepreneurs due to the pressure exerted on them by circumstances are termed as instigated entrepreneurs. Traditional money lenders are forced to enter into business on account of the decline of money lending activity, the severity of Government policies and the growth of banking. The problem of unemployment has also instigated several youths of our country to earn their livelihood by trying their luck at the business field.In addition to the above types; entrepreneurs are also classified as entrepreneursof the first generation (or new entrepreneurs), rural entrepreneurs, urban entrepreneurs, male entrepreneurs, women entrepreneurs, small scale entrepreneurs, large scale entrepreneurs etc. In a country like India where the economic system is planned, the Government itself has emerged as the main entrepreneur.Entrepreneurs are also classified on the basis of objectives, viz., (i) managing entrepreneur whose main objective is safety, (ii) innovative entrepreneurs who are instigated by excitement, and (iii) entrepreneurs who are fond of controlling power and who consider supremacy as the greatest gift.

Entrepreneur and Enterprises

The enterprise is the basic unit of an economic organization. It produces goods and services worth than the resources used. Enterprise is an undertaking, especially one which involves activity, courage, energy. It involves the willingness to assume risks in undertaking an economic activity. It also involves innovation. It always involves risk-taking and decision-making. Thus, entrepreneur and enterprise are inter-linked, enterprise being the offshoot of an entrepreneur. Its success is dependent on the entrepreneur. Entrepreneur is the fourth factor of enterprise.Four Factors of an Enterprise

Entrepreneur

CapitalLabourEnterprise

Land

Entrepreneur Vs Manager:

An entrepreneur is different from a manager. The main points of difference between the two are described below:

PointsEntrepreneurManager

1. Motive-The main motive of an entrepreneur is to start a venture by setting up an enterprise. He understands the venture for his personal gratification.But, the main motive of a manager is to render his services in an enterprise already set up by someone else.

2. Status -An entrepreneur is the owner of the enterpriseA manager is the servant in. the enterprise owned by the entrepreneur.

3. Risk-bearingAn entrepreneur being the owner of the enterprise assumes all risks and uncertainty involved in running the enterprise.

A Manager as a servant does not bear any risk involved in the enterprise.

4. RewardsThe reward an entrepreneur gets for bearing risks involved in the enterprise is profit which is highly uncertain.A manger gets salary as reward for the services rendered by him in the enterprise. Salary of a manager is certain and fixed.

5. InnovationEntrepreneur himself thinks over what and how to produce demands of the customers Hence, he acts as an innovator also called a change-agentBut, what a manager does is simply to execute the plans prepared by the entrepreneur thus, a manager simply translates the entrepreneurs ideas into practice.

6. Qualifications-An entrepreneur needs to possess qualities and qualifications like high achievement motive, originality in thinking, foresight, risk bearing ability and so on.On the contrary, a manager needs to possess distinct qualifications in terms of sound knowledge in management theory and practice.

7. ActionDelegates action, Supervising and reporting take most of energy.Gets hands dirty. May upset employees by suddenly doing their work.

After going through the above points of distinctions, it is clear that an entrepreneur differs from a manger. At times, an entrepreneur can be a manager also, but a manager cannot be an entrepreneur. After all, an entrepreneur is a owner, but a manager is a servant.

Intrapreneureship

A dictionary meaning to word provides that " A person within a large corporation who takes direct responsibility fortuning on idea into a profitable finished pdt. Through assertive risk taking and innovation is an entrepreneurs" It is derived as INTTA ( Corporate ) + (Entre ) PRENEUR ]The word intrapreneur is recently coined corporate counterpart to long existing term entrepreneur this coinage is attributed to mgmt consultant Giffored Pinchot author of 1985 book entitled intrapreneuring.Entrepreneurship is a combination of entrepreneurship and mgmt skills. In simple word intrapreneurship is a practice of entrepreneurship by employees with in an organization. The trend today is such that every one who is capable of managing others business is himself indulging in entrepreneurship. That is resulting in inadequency of mgmt staff. In the emergence of this changing pattern, the concept of intrepreneurship is oreginated where the intrepreneur (i.e. Manager) is made the head of a given business unit and asked to manage it for the organization while employing innovative skills. As an example, when a company seeks for diversification options, they can appoint one of their manager as an interpreneur to launch the business venture. In short an intrapreneur thinks like an entrepreneur looking out for opportunities, which profits the organization.

Different between an Entrepreneur and an Intrapreneur

An entrepreneur takes substantial risk in being the owner and operator of business with expectation of financial profit and other rewards that the business may generate. On the contrary, an intrapreneur is an individual employed by an organization for remuneration, which is based on financial success of the unit he is responsible for. Intrapreneur shares the same traits as entrepreneur such as conviction, zeal and insight. As the Intrepreneur continues to express his ideas vigorously, it will reveal the gap between the philosophy of the organization and the employee. If the organization supports him in pursuing his ideas, he succeed. If not, he is likely to leave the organanisation and set up his own business.Entrepreneur is a key person who envisages new opportunities, new techniques, new lines of potion, new products and coordinates all others activities for profit motives on the other hand, intrepreneur are entrepreneur who catch hold of a new idea for product, service or process and work to bring this idea to fruition with in the framework of the organization. Intrepreneur with their innovation and dedicated efforts are perceived as valuable asset by the organization, inspiring others.They serve as champions to others in those organizations.

The entrepreneur is typically a visionary who spots an opportunity in the market place and has the passion and contract base to set the wheels in motion. The intrapreneur has passion and drive but also has operational skills of running the "Clockwise" of the business to enable a good idea to be turned into commercial reality. He is the inside "entrepreneur".

Intrapreneurship Vs Entrepreneurship

1. Entrepreneur can be found anywhere whereas intrapreneurs are found, rather encouraged within the confines of the organisation.1. While entrepreneur face hurdles in the form of ridicule and setback from the society in general; intrapreneurs have to face rivalry within the organisation they work.1. Entrepreneurs find it difficult to arrange resources while these are readily available to intrapreneurs.

Distinguishing factorManagerEntrepreneurIntrapreneur

Primary focusSalary, Promotion, TraditionalCorporate rewardsIndependent chance toCreative. OpportunityTo make more money.Independent chance to be creative. Tomake towards organizational and personal success.

Skills requiredManaging qualities like leadership, organizing, planning etc.Creativity, Innovative, risk taking, Visionary passion dedication and determination.

Blend of managerial and entrepreneurial skill.

Time focusShort term to meet dead lines from top mgtSurvival and achieving long term growth.To meet self imposed deadlines.

Activity delegationDelegated by top management

Delegated to oneself extreme

Amount of risk bearingConservativeHigh Moderate

Failure and MistakesMinimizes mistakesDeals with mistake

Availability of ResourcesReadily availableNeeds to arrange

Decision

Agrees with top level managementFollows a dreamGet help from other to achieve dreams

Role of an Entrepreneur in Economic Development with special reference to developing economies like India.

The entrepreneur who is a business leader looks for ideas and puts them into effect in fostering economic growth and development. Entrepreneurship is one of the most important inputs in the economic development of a country. The entrepreneur acts as a trigger head to give spark to economic activities by his entrepreneurial decisions. He plays a pivotal role not only in the development of industrial sector of a country but also in the development of farm and service sector. The major roles played by an entrepreneur in the economic development of an economy are discussed in a systematic and orderly manner as follows.

1. Contribution to GDP: Increase in the Gross Domestic Product or GDP is the most common definition of economic development. You are aware that income is generated in the process of production. So, entrepreneurs generate income via organisation of production be it agriculture, manufacturing or services.You are also aware that income generated is distributed among the factors of production where land gets rent, labour gets wages and salaries,capital gets interest and the residual income accrues to the entrepreneur in the form of profits. As rent and interest accrue to those few who have land and capital respectively whereas larger masses are destined to earn their incomes via wage employment, the biggest contribution of the entrepreneurship lies in capital formation and generation of employment. This is what we turn our attention to.2. Capital Formation: The entrepreneurial decision, in effect, is an investment decision that augments the productive capacity of the economy and hence results in capital formation.In fact, GDP and capital formation are related to each other via Capital Output Ratio (COR); more precisely Incremental Capital Output Ratio (ICOR) that measures the percentage increase in capital formation required obtaining a percentage increase in GDP. So, if a country desires to grow @ 10.0 % p.a.and its ICOR is 2.6, then it must ensure capital formation @ 26.0% p.a.Entrepreneurs, by investing their own savings and informally mobilizing the savings of their friends and relatives contribute to the process of capital formation. These informal funding supplements the funds made available by the formal means of raising resources from banks, financial institutions and capital markets.3. Generation of Employment: Every new business is a source of employment to people with different abilities, skills and qualifications. As such entrepreneurship does not become a source of livelihood to those who do have capital to earn interest on nor have the land to earn rent. In fact, what they earn is not only a livelihood or means of sustenance but also a lifestyle for themselves and their families as well as personal job satisfaction. As such entrepreneurs touch the lives of many, directly as well as indirectly.

4. Generation of BusinessOpportunities for Others: Every new business creates opportunities for the suppliers of inputs (this is referred to as backward linkages) and the marketers of the output (what is referred to as forward linkages). As a pen manufacturer you would create opportunities for refill manufacturers as well as wholesalers and retailers of stationery products. These immediate linkages induce further linkages. For example greater opportunities for refill manufacturers would mean expansion of business for ink manufacturers. In general, there are greater opportunities for transporters, advertisers, and, so on.So, via a chain-reaction, entrepreneurship provides a spur to the level of economic activity.5. Improvement in Economic Efficiency: You are aware that efficiency means to have greater output from the same input. Entrepreneurs improve economic efficiency bya. Improving processes, reducing wastes, increasing yield, and. b.Bringing about technical progress that is, by altering labor-capital ratios. You are aware that if labor is provided with good implements (capital), its productivity increases.

(6) Promotes Balanced Regional Development:

Entrepreneurs help to remove regional disparities through setting up of industries in less developed and backward areas. The growth of industries and business in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc. Setting up of more industries leads to more development of backward regions and thereby promotes balanced regional development.

(7) Reduces Concentration of Economic Power:

Economic power is the natural outcome of industrial and business activity. Industrial developments normally lead to concentration of economic power in the hands of a few individuals which results in the growth of monopolies. In order to redress this problem a large number of entrepreneurs need to be developed, which will help reduce the concentration of economic power amongst the population.

(7) Promotes Country's Export Trade:

Entrepreneurs help in promoting a country's export-trade, which is an important ingredient of economic development. They produce goods and services in large scale for the purpose earning huge amount of foreign exchange from export in order to combat the import dues requirement. Hence import substitution and export promotion ensure economic independence and development.

(9) Facilitates Overall Development:

Entrepreneurs act as catalytic agent for change which results in chain reaction. Once an enterprise is established, the process of industrialization is set in motion. This unit will generate demand for various types of units required by it and there will be so many other units which require the output of this unit. This leads to overall development of an area due to increase in demand and setting up of more and more units. In this way, the entrepreneurs multiply their entrepreneurial activities, thus creating an environment of enthusiasm and conveying an impetus for overall development of the area.

Entrepreneurial culture

An entrepreneurial culture is an environment where someone is motivated to innovate, create and take risks. In a business, an entrepreneurial culture means that employees are encouraged to brainstorm new ideas or products. When work time is dedicated to these activities, it is called intrapreneurship.Some communities foster an entrepreneurial culture as well. Silicon Valley, part of the San Francisco Bay area, is famous as a launching pad for startup technology companies. Families may promote entrepreneurship as well. Parents who encourage their children to take risks and teach them the value of self-employment may raise kids who become future entrepreneurs.The culture of any entrepreneurial business starts from the first day. It is a reflection of the values the entrepreneur brings into the business. Culture, being a vital part of every entrepreneurial venture, acts as a means to institutionalize the values of its founders. Culture serves to socialize new employees and they learn to treat customers, each other and many other things, such as how to fit in and be successful within the business.Normally, smaller organizations are able to retain this culture of entrepreneurship. In bigger organizations, the moment you start to grow, complexity also grows and chaos emerges. And to put chaos to rest, process comes into function.Now, when we start creating processes for everything, minimal thinking is required; the thrust is to eliminate mistakes. Then a market shifts happens due to competition, technology, socio-economic factors, and then the already-created process makes entire system bureaucratic as companies are unable to adapt the culture quickly.Therefore if companies are trying to create entrepreneurial ethnicity, they need to focus on three things: Creating a culture of Self Discipline: People with this quality dont require any guidance about whats to be done. They will mostly act wisely and will do what is right. Freedom: The moment you bring people with self discipline, you can give more freedom, which will turn into an approval-free organisation. Push responsibility further down: There are myths in the organisation that the more control we put on ourselves, the more efficient we become and if people have power they will misuse it. But thats not true.The entrepreneurial nature of the organisation plays an important role in the success of a business. So it is important to sustain it by hiring the right person for the right position. It is essential to carefully screen prospective employees to ensure that they will fit within the culture.An entrepreneurial culture is also about sustaining autonomy and respecting employees by maintaining consistent communication about the entrepreneurial vision for the company.Creating an entrepreneurial culture creates a business that will continue to grow, provided changes are adapted and new opportunities are actively pursued in the market.So, how is an entrepreneurial culture put in place?In an organization with an entrepreneurial culture, work is more a priority than the job; it becomes a lifestyle. Employees work like a team, share issues or problems facing the company and together try to resolve whatever comes in between the growth of the company and themselves. Employers need to place the following benchmarks in order to create harmony at the workplace: Respecting everyone: This is a very simple premise, which threads through each and every complicated issue that can arise within a company. Respect and trust provide the necessary base for a vibrant and sustainable corporate culture.

Better Communication. Employers should create an environment where people can interact with each other, support each other and recognise each others efforts and achievements. Positive rewards should be given for positive behaviour. Sharing information with employees makes them aware of the direction of the company and they feel a kind of involvement with the place they work for. Forge comradeship. Make time for people to get to know each other and the company. Like an annual off-site meeting to build team spirit and discuss where the company is headed. At such events, one can also distribute and share the business plan and discuss issues and ideas raised by strategies. People without self-discipline or who do not fit in the culture should be asked to leave as early as possible.

Managers should not go through emotional turmoil in making sure that everybody is satisfied. They should be incentivized to construct ace teams. A person who has done great work in the past and is not suited for a role anymore should be given a kind severance package.Sustaining Entrepreneurial Culture: Once the company has a group of trusted and informed employees, dont let the culture thats evolving just be. It needs to be watched so that it grows as intended. The trick is standing back, but not too far back. In maintaining the culture, consider these rules: Let the team build itself. Within that secure, open environment, let employees grow together without being made to. Involve yourself without controlling. Dont forget the little things. Culture is made up of many small actions that, when put together, create something larger than the sum of the parts. There are many things a CEO can do to make employees feel a part of the company. Some are just common courtesies: hallway conversations, saying hello in the morning, opening doors, asking after peoples families and partners. Others are little extras, such as flowers to say thank you and happy-birthday e-mail messages. Eating lunch with employees, helping spouses find jobs and participating in team events shows that the CEO is involved with the employees.

What is a business Plan?

Abusiness planis a formal statement of a set ofbusinessgoals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.Business plans may also target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their annual return in that time frame a business plan serves several purposes.1. Enable the entrepreneur to think through the in a logical and structured way and to setout stages in achievement of business objective.2. Enable the entrepreneur to plot progress against the plan.3. Ensure that resources needed to carry out the strategy and time when they are required are both identified.4. preparing the business plan ensures that the entrepreneur has thought through the crucial aspects of the venture.5. IT is a mean of making all employees aware of the business direction (Assuming that key features of business direction are conveyed to the employee.6. This is an important document for discussion with prospective investors and lenders of finance.A good business plan would document short term & long term goals of the business and set specific tasks for achieving these goals. Business planning is the ongoing process & it should be updated regularly to assist in forward planning. The very process of researching and writing the business plan should update clearly ideas and identify gaps in management information about their businesses, competitors and the market.

ADVANTAGES OF BUSINESS PLANNING

Potential benefits realized from the development of business plan include- Improved understanding of opportunities, problems and weakness Greater control over organization A valuable source of information about your business that may be required by third parties. Improved use of your company resources Increased employee motivation Increased profits and sustained growth

ROLE OF ENTREPRENEURS IN RELATION TO THEIR ENTRIPRISE / BUSINESS PLANNING PROCESS

As discussed above, a successful entrepreneur lays down a step by step that he /she follows while starting a new business, This business plan acts a guiding tool to the entrepreneur and is dynamic in nature- and needs continuous review and updating so that the plan remains viable even in the changing business situations. The various steps involved in the business planning process are.

1. Idea Generation2. Environmental scanning3. Feasibility analysis4. Drawing up a functional plan5. Project report preparation6. Evaluation, control and review.

1. Idea Generation- It is the first preliminary stage of business planning process. It involves generation of new concepts, ideas, products or services to satisfy the existing demand, latent demand and future demand of the market. The various sources of new idea are:

Consumers Existing companies Research and development Dealers , retailers

The various method of generating new ideas are Brainstorming Group discussion Data collection through questionnaire from consumers existing companies, dealers, retailers Invitation of ideas through advertisement , mails internet Value addition to current product/ services Market research

Screening of the new ideas should be undertaken so that promising new ideas are identified and impractical ideas are eliminated.

2. Environmental Scanning- Once a promising idea emerges through the idea generation phase, the next step is environmental scanning which is carried out to analyze the prospective strength, weakness

Opportunities and threats of business enterprises. Hence before getting into finer details of setting up business, it is advisable to scan the environment- both internal and external and collect information about the possible opportunities threats, from the external environment and strength and weakness from internal environments The various variable to be scanned are in terms of socio- cultural, economic, governmental technological and demographic changes taking place in the external environment and availability of raw material, machinery, finance, human resource, etc with the entrepreneur. The various sources from which information can be gathered are informal sources (family, friends colleagues,etc)and formal sources (magazines, newspapers, government departments, seminars, suppliers ,dealers , competitors).The objective for a successful environmental scanning should be to maximize information and hence entrepreneur should collect information from as many resources as possible and then analyze them to understand whether the given information would be supportive/ obstructive to the business venture.The Economic variable the IndicatorInternal Environment Feasibility study

Sociocultural AppraisalIt assesses the various trends in terms of social and cultural norms. Hence it includes the various values, beliefs, fashion statements, attitudes etc, of the individual in the society for a given set of time. It can help in understanding the flexibility / rigidity of the population and hence, can be used to predict the accessibility of new products. And services in that geographical area.

Technological AppraisalIt asses the various technological know- how available IT also indicates the various modern technologies expected in the near future & and their receptiveness by the industry

Economic AppraisalIt assess the overall economic status of the nation, overall growth rate, growth rate of the industry in which the prospective business enterprise falls, inflation rate, etc

Demographic AppraisalIt assesses the pattern and distribution of population in particular geographical region. It includes studying population trends, income distribution, education profile, age etc.

Government AppraisalIt assesses the various legislation and policies related to business that are in force for a particular industry in a country. It also assess the overall industrial policy, taxation, subsidies, incentives, grants, export/ import Policy , financial institutions and their norms and procedure

Raw MaterialIt assesses the availability of raw material available now and what would be available in the near future. Efforts should be made to even find alternative sources of current new material.

ProductionIt assesses the requirement of various machineries, tools and techniques that are available or would be available in the near future.

FinanceIt assesses the total requirement of finance. It also indicates the sources of finance that can be approached for funding.

MarketIt assesses the demand of the market.

Human ResourceIt assess the availability of labor and the completion for labor in the market

External environment

This study is undertaken to find out whether the proposed project (considering the above environment appraisal) would be feasible or not. Feasibility study is carried out to assess the feasibility of the project itself in particular environment. Hence through feasibility study we can dependent on environment appraisal. Yet, it has its own dimensions/ variables.

The various dimensions/ variables are discussed below. Market Feasibility Technical/ Operational Feasibility Financial Feasibility

Market FeasibilityMarket analysis is conducted for the following reasons To estimate the aggregate demand of the proposed product/service in future. To estimate the aggregate demand of the proposed product/ service in future.Hence, market analysis is concerned with broadly two variables.1. Present/future aggregate demand of the proposed product service.2. Excepted market share of the proposed business enterprise.The demand analysis and market share is based on a number of factors like consumption pattern, availability of substitute goods/services, type of competition, etc.The following steps are involved in market feasibility analysis:1. Setting objectives for the market feasibility: This is the first step for market feasibility analysis-a preliminary discussion with consumers, retailers distributers, competitors, suppliers, etc.is carried out to understand the consumer preferences ,existing, latent and potential demands, strategy of competitors and practices of distributors,retailer,etc the objective of formal study needs to be comprehensive enough so that it is able to generate the desired answer to the following question:1. Who are the consumer and customers-present and prospective?2. What is the present and future demand?3. How is the demand distributed seasonally (for example, air conditioner are required from may to September in most part of India?4. What is the demand distributed geographically?5. What much price is the consumer willing to pay?5. What is the marketing mix of competitors?6. What marketing mix would the consumer accept?2. Primary data collection: Primary data collection is undertaken through market survey. Market survey can be census survey (collected data from the entire targeted population)or it could be a sample survey (drawing a sample unit from a targeted population and collecting data from them).the method for data collection (census or sample survey) depends on time and cost constraints plus degree of accuracy required from the primary

Secondary Data Collection Census of India publication which provides statistical data on population distribution household size, demographic characteristic large age, education etc. National sample survey reports issued by cabinet secretariat, government of India. They provide information on various economic and social aspects. Plan reports issued by the planning commission. UNDP Reports: world statistics on population, HRD India. Central statistical organization provides demographic information of national income and agricultural and industrial statistics. Economic survey in a annual publication issued by the ministry of finance which provides data on industrial production, prices exports ,imports national income etc.Demand Forecasting

After gathering the primary and secondary data, demand forecasting is done to estimate the future demand. The various method of demand forecasting are given below:Qualitative Methods: These are the judgmental methods in which experts translate the information collected from the primary and secondary data into qualitative estimates.Jury of Executive Method: In this method, a group of experts give their views on excepted future demand their judgment are combined and their mean frequency gives the demand estimates.Delphi Method: This method involves collecting information/opinion from a group of experts eho dont interact face-to-face. a questionnaire for demand estimation is mailed to them and their asked to express their views. Responses received from them are summarized and sent back to each of the experts along with questions to probe further the reasons fro views expressed in the first round. this is repeated until all experts converge to a common demand estimate.

Time Series Projection method: They are based on the historical time series which is the past tend of demand.Trend Projection method: This method is very popular and involves extra polating the past trend on to the future.Exponential smoothing Method: In this method, forecast is modified in the light of observed errors.

Moving Average Method: According to this method, the forecasts for the next period represent a simple average or weighted arithmetic average.

Technical/Operational feasibilityTechnical/operational analysis is done to assess the operational ability of the proposed business enterprise. The cost and availability of technology may be of critical importance to a feasibility of a project or it may not be an issue at all. For example, a hospital might need the latest techniques to stave off competition.Key question to be answered to stave off competition:a. what are the technological need of the proposed business?b. what other equipment does the proposed business need?c .from where will this technology and equipment be obtained?d. From where can be technology and raw material be obtained?e. What would be the equipment and technology cost?Technical/operational analysis collects data on the following parameters: Material Availability Material requirements Planning Plant location Plant capacity Machinery and equipment Plant layout

a. Material Availability: It is imperative to assess the availability of the raw material required for production goods/services. The feasibility study of raw material should make an account of the following variables: The availability of quality and quantity of raw material The factors on which the availability of raw material is dependent Price sensitivity (elasticity)of raw material Perishable time of raw material

b. Material Requirement planning is undertaken to analyze the quantity of material that would be let the production run smoothly. It would be dependent on material availability variables mentioned above.c. Analysis of Choice of Technology: It is done to identify whether the product developed at the idea of generation stage is technologically feasible or not, it answer question such as: Whether a technology for the product exists or not? If technology exists in more than one form, then which technology would be more profitable to the company?The choice of technology would be affected by: Capacity of plant Amount of investment Availability of technology Production cost Latest developments Quantity of planned production Effects of environmentsd. Plant Location: Plant location refers to fairly broad area where the enterprise is to be established like city, industrial zone or costal area .plant location is the physical layout of the business and is affected by process of production ,safety of personnel, minimum production cost ,scope of expansion, proper space utilization, etcThe choice of the location is affected by the following: Proximity to raw material and markets Availability of infrastructure like power, transportation, water means of communication Favorable government policies Order factor like climatic condition, availability of power etc, can affected the decision of plant locatione. Machineries and Equipment: these are the dependent on production technology, plant capacity, investment cost of buying, maintenance and running cost

Financial FeasibilityOnce marketing, operational and organizational analysis has been done successfully ,finally ,financial feasibility is done to assess financial issue of proposed business venture .following cost of estimates have to be done:

a) Cost of Land and Building: dependingb) Cost of plant and machinery: It includes estimates of the cost of plant and machines, their running and maintenance.C) Preliminary cost estimation is made to assess how much cost would be required in conducting the market survey, preparing feasibility report, expenses in registration amd incorporation, procuring machinery etc.d) Working capital estimates for running the business are also made.e) Cost of production which would include raw material cost, labor cost, overhead expenses, utilities like power, water, fuel etcf) Provision for contingency need to be made to cover certain expenses which can emerge due to change in external environment. For example, increase of prices of raw materials goes up if the price of diesel is revised.h) Profitability projections are made on the following parameters:I. Cost of productionII. Sales expensesIII. Administrative expensesIV. Expenses salesSummation of all above gives gross profit.Based on the above information, the following projections are made:1) Break-even point2) Cash flow projections3) Balance sheet statement.

1. Drawing functional PlanAfter the feasibility study one can go into the details of drawing up functional plans which would determine strategies for all operational areas: Marketing finance, HR & production.Marketing PlanMarketing Plan lays down the strategies of marketing which can lead to the success of business. These strategies are in the terms of marketing mix (product, place, price, promotion).From the market feasibility study and marketing research, potential/ present demands of customers are determine4dwhichhelp in understanding the profile of customers and help in laying down the strategies for segmentation of market, identification of target market and laying down strategies for target market.

Production / operation planProduction plan is drawn up for business for business enterprise for manufacturing sector whereas operational plan are drawn up for business for business enterprise for service sector. The production / operation plan should include the strategies for the following parameter.1. Location and reasons for selecting the location.2. Physical layout3. Cost and availability of machinery, equipments an draw material.4. List of suppliers5. Quality management6. Production scheduling, capacity management and inventory management7. Cost of manufacturing / running the operations8. Changes in above in case of expansion of business.Organizational PlanOrganizational Plan defines the type of ownership: it could be single proprietary, partnership company, private limited or public limited. It also proposes an organizational structure and human resource management practices that would govern the successful running of the proposed business enterprise.Financial PlanFinancial Plan indicates the financial requirement of proposed business enterprise such as1. Cost incurred in the smooth functioning of all financial plan(marketing, operations and human resource)2. Projected Cash flow3. Projected income statement4. Projected break-even point5. Projected balance sheet

5 Project report preparationAfter environmental scanning and feasibility analysis, the project report business plan has to be prepared. The business plan is a written document that describes step-by-step strategies involved in running of business.

Sample Outline of a Business Plan

I. Cover Sheet (name of the company, address, )II. Table of contentIII. Executive Summary(2-3 pages)IV. The BusinessA Description, history (including past performance)

1. Form of business (if incorporated, show where)2. Location of headquarter3. Principals or ownersB Objectives of owners or managers

1. Projections & forecast2. Current and proposed Capital structureC Funding required

1. Equity2. DebtD Timing and use of funds

1. When capital needed2. How funds will be usedv. The product or service

A. Description of brand names, pricesB. Comparison with competitive products or services (e.g. competitive advantage, weakness)C. Research and DevelopmentVI Marketing PlanA. Overall strategy and tactics including risks and pitfallsB. Size and history of market including trends (growth vs. flat)C. profiles of customers and end users: preferences and needD. Strengths and weakness of competitorsE. Product linesF. Advertising and promotionsG. PricingH. Distribution channel: distributors, dealers , retailers etcI. Regulatory Requirements

VII. Productions and OperationsA. Description of operations(all facets from raw material to finished product)1. Workforce (management, rank)2. Principal suppliersB. Facilities and equipment1. Existing2. Required

C. Material, labor and supplies used

Financial information

A. For existing companies , provide a summary of historical financial dataB. Projected financial statements for thee to five years1. Cash flow statements2. Income statements3. Balance sheets4. Breakeven analysis5. Significant financial assumptions (interest rates, profit margin etc.)IX Supporting DocumentsA. Management biographies and resumesB. Organizational chartC. Historical financial statements for past three to five yearsD. Employment contractsE. Articles of incorporation

6. Evaluations, Control & Review

As stated earlier, it is imperative to continuously review and evaluate all aspects of the business. This is because completion in todays globalized world is high and technological changes are taking place at much faster rates. For example HLL had come up with new strategy: anew product every month. Hence it is dynamic business environment, it is important to evaluate, control and review the business periodically.

Estimating and financing fund requirement

You know that production is the outcome of five factors of production viz., land, labor, capital, entrepreneurship and organisation.These factors are mutually dependent on each other. The availability of all the five factors in proper proportions is very necessary to produce the desired level of production. Having prepared the project report, the time comes when the entrepreneur needs to decide on the need for and sources of finance as per his/her projections made in the project report. What follows in this unit is therefore, to learn why finance is needed, what the various sources of finance are and other aspects of the entire gamut of financing of a small-scale enterprise.

Need for Financial Planning

Finance is one of the important prerequisites to start an enterprise. In fact, it is the availability of finance that facilitates an entrepreneur to bring together land, labor, machinery and raw material to combine them to produce goods. The significance of finance in production is elucidated like a lubricant to the process of production. There are others also who hold even the metaphorical views that finance is the life-blood of enterprise. The trite phrase whoever has the gold makes the rule also underlines the every significance of finance for small enterprises, in particular, and industry, in general.Financing enterprises whether large or small is a critical element for success in business. Instances are gallore to cite that many enterprises, though potentially successful, failed because they were under-capitalized. Therefore, what follows is that every enterprise should clearly chalk-out its future financial requirements in its very beginning itself. The decisions taken by the entrepreneur well in advance regarding the future financial aspects of his/her enterprise is called financial planning. In other words, financial planning deals with futurity of present decision in terms of financial aspects of an enterprise. In short, financial planning is a financial forecast made for the enterprise in the beginning itself.

In a financial plan/financial forecast, the entrepreneur should clearly answer the following two questions:

1. How much money is needed?2. Where will money come form?

Loans from Financial Institutions:

Industrial Development Bank of India (IDBI):

The IDBI was established on July 1, 1964 under the Act of Parliament as the principal financial institution in the country. Initially, it was set up as wholly owned subsidiary of the Reserve Bank of India. In February 1976, the IDBI was made an autonomous institution and its ownership passed on from the Reserve Bank of India to the Government of India. The IDBI provides assistance to the small-scale industries through its scheme of refinance and, to a limited extent, through its bills rediscounting scheme. The IDBI has shown its particular interest in the development of small scale industries. of refinance and, to a limited extent, through its bills rediscounting scheme.The IDBI has shown its particular interest in the development of small scale industries.

Industrial Finance Corporation of India Limited (IFCI):The Government of India set up the Industrial Finance Corporation of India(IFCI) under IFCI Act in July 1948. In recent years, the IFCI has started newPromotional Schemes, such as

a) Interest subsidy scheme for women entrepreneurs.b) Consultancy fee subsidy schemes for providing marketing assistance to Small-scale industries.c) Encouraging the modernization of tiny, Small-scale ancillary units.d) Control of pollution in the small and medium-scale industries.

Industrial Credit and Investment Corporation of India Limited (ICICI):The ICICI was set up in January 1955 under the Indian companies Act with the primary objective of developing small and medium industries in the private sector.

State Financial Corporations (SFCs) s:

In order to cater the financial requirements of a large number of small-scale units, the State Finance Corporation Act was passed by the Parliament on September 28, 1951 under which the state Financial Corporations (SFCs) could be set up. The first SFC was set up in Punjab in 1953. Today, there are in all 18 SFCs in the country.

Small Industries Development Bank of India (SIDBI):

With a view to ensuring larger flow of financial and non-financial assistance to the small-scale sector, the government of India set up the Small Industries Development Bank of India (SIDBI) under a special Act of the Parliament in October 1989 as a wholly-owned subsidiary of the IDBI. The bank commenced its operations form April 2, 1990 with its head office in Luck now.

SIDBI schemes are as follows:

1. Schemes for setting up SSI units-cost for projects not to exceed Rs 300 Lakhs.

2. Composite loan scheme (cottage, tiny and village industries)-the loan limit not to exceed Rs 50,000.within repayable 7-81/2years.

3. Scheme for SC/ST and physically handicapped persons- loan limit not to exceed Rs 50,000 This schemes is meant for cottage, tiny and village industries.

4 .Schemes for professionals-the cost for projector not to exceed Rs10lakhs and cost of land and building not to exceed 50% of total outlay.

5. Scheme for marketing activities:a. Schemes for marketing organizations-cost of project not to exceed Rs25 lakhs. Down payment of at least 50% of value of good purchased.

b. Schemes for the purchase of mobile sales vans-loan limit not to exceed Rs 3 lakhs per vehicle.

6. Schemes for tourism related activities-cost of project not to exceed Rs45 lakhs.

7. Schemes for and restaurant projects-cost of project not to exceed Rs45 lakhs;

8. Schemes for infrastructure development:

a. Schemes for setting up industrial estates-cost of project not to exceed Rs300 lakhsb. Schemes for the development, maintenance and construction of roads the loan limit is needed based.

Venture Capital-Venture Capital is the fund/initial capital provided to businesses typically at a start-up stage and many times for new/ untested ideas. Venture capital normally comes in where the conventional sources of finance do not fit in. Venture capital funds are mutual funds that manage venture capital money i.e. these funds aggregate money from several investors who want to provide venture capital and deploy this money in venture capital opportunities.Where does venture capital come from?Venture capital funds come from venture capital firms, which comprise professional investors who understand the intricacies of financing and building newly formed companies. The money that venture capital firms invest comes from a variety of sources, including private and public pension funds, endowment funds, foundations, corporations and wealthy individuals, both domestic and foreign. Those who invest money in venture capital funds are considered limited partners; while the venture capitalists are the general partners charged with managing the fund and working with the individual companies. The general partners take a very active role in working with the company's founders and executives to ensure the company is growing in a profitable way.In exchange for their funding, venture capitalists expect a high return on their investment as well as shares of the company. This means the relationship between the two parties can be lengthy. Instead of working to pay back the loan immediately, the venture capitalists work with the company five to 10 years before any money is repaid. At the end of the investment, venture capitalists will sell their shares of the company back to the owners, or through an initial public offering, for what they hope is significantly more than they initially put in. The most recent available statistics found more than 450 active U.S. venture capital firms that had each invested at least $5 million. The firms had an average fund size of nearly $150 million.Research from the National Venture Capital Association revealed that in 2012, venture capitalists invested approximately $22 billion into nearly 2,749 companies, including 1,000 of which received funding for the first time. Among the more famous companies to receive venture capital during their startup periods are Apple, Compaq, Microsoft and Google.Typically venture capital funds have a higher risk/ higher return profile as compared to normal equity funds and whether you should invest in these would depend on your specific risk profile and investment time-frame.

THE ROLE OF GOVERNMENT IN SUPPORTING ENTREPRENEURSHIP

Small and Medium-sized Enterprises (SMEs) in marketeconomiesare the engine of economic development. Owing to their private ownership, entrepreneurial spirit, their flexibility and adaptability as well as their potential to react to challenges and changing environments, SMEs contribute to sustainable growth and employment generation in a significant manner.SMEs have strategic importance for each national economy due a wide range of reasons. Logically, the government shows such an interest in supporting entrepreneurship and SMEs. There is no simpler way to create new job positions, increasing GDP and rising standard of population than supporting entrepreneurship and encouraging and supporting people who dare to start their own business. Every surviving and successful business means new jobs and growth of GDP.Therefore, designing a comprehensive, coherent and consistent approach of Council of Ministers and entity governments to entrepreneurship and SMEs in the form of government support strategy to entrepreneurship and SMEs is an absolute priority. There are no doubts that governments should create different types of support institutions:i)To provide information on regulations, standards, taxation, customs duties, marketing issues;ii)To advise on business planning, marketing and accountancy, quality control and assurance;iii)To create incubator units providing the space and infrastructure for business beginners and innovative companies, and helping them to solve technological problems, and to search for know-how and promote innovation; andiv) To help in looking for partners. In order to stimulate entrepreneurship and improve the business environment for small enterprises.Training

Basic training differs from product to product but will necessary involve sharpening of entrepreneurial skills. Need based technical training is provided by the Govt. & State Govt. technical Institutions.There are a number of Government organizations as well as NGOs who conduct EDPs and MDPs. These EDPs and MDPs and are conducted by MSME's, NIESBUD, NSIC, IIE, NISIET, Entrepreneurship Development Institutes and other state government developmental agencies.Marketing Assistance

There are Governmental and non-governmental specialised agencies which provide marketing assistance. Besides promotion of MSME products through exhibitions, NSIC directly market the MSME produce in the domestic and overseas market. NSIC also manages a single point registration scheme for manufacturers for Govt. purchase. Units registered under this scheme get the benefits of free tender documents and exemption from earnest money deposit and performance guarantee.Promotional Schemes

Government accords the highest preference to development of MSME by framing and implementing suitable policies and promoteWhy Entrepreneurs Fail: Businesses must expand their business model in order to be successful. They cannot stand on one leg (one approach) and continue to be profitable. They must constantly be putting their energy into lead generating systems, making connections, setting goals and, most importantly, building ladders to the public. If they are not moving forward; they are moving backwards. There is no such thing as standing still in businessDistrict Industries Center (DIC)District Industries Center (DIC) he 'District Industries Centre' (DICs) programme was started by the central government in 1978 with the objective of providing a focal point for promoting small, tiny, cottage and village industries in a particular area and to make available to them all necessary services and facilities at one place. The finances for setting up DICs in a state are contributed equally by the particular state government and the central government. To facilitate the process of small enterprise development, DICs have been entrusted with most of the administrative and financial powers. For purpose of allotment of land, work sheds raw materials etc., DICs functions under the 'Directorate of Industries'. Each DIC is headed by a General Manager who is assisted by four functional managers and three project managersObjectives of District Industries Centre (DIC):

The important objectives of DICs are as follow:

i. Accelerate the overall efforts for industrialization of the district.ii. Rural industrialization and development of rural industries and handicrafts.iii. Attainment of economic equality in various regions of the district.iv. Providing the benefit of the government schemes to the new entrepreneurs.v. Centralisation of procedures required to start a new industrial unit and minimisation- of the efforts and time required to obtain various permissions, licenses, registrations, subsidies etc.Functions of District Industries Centre (DIC):i. Acts as the focal point of the industrialization of the district.ii. Prepares the industrial profile of the district with respect to:iii. Statistics and information about existing industrial units in the district in the large, medium, small as well as co-operative sectors.iv. Opportunity guidance to entrepreneurs.v. Compilation of information about local sources of raw materials and their availability.vi. Manpower assessment with respect to skilled, semi-skilled workers.vii. Assessment of availability of infrastructure facilities like quality testing, research and development, transport, prototype development, warehouse etc.

viii. Organises entrepreneurship development training programs.ix. Provides information about various government schemes, subsidies, grants and assistance available from the other corporations set up for promotion of industries.x. Gives SSI registration.xi. Prepares techno-economic feasibility report.xii. Advices the entrepreneurs on investments.xiii. Acts as a link between the entrepreneurs and the lead bank of the district.xiv. Implements government sponsored schemes for educated unemployed people like PMRY scheme, Jawahar Rojgar Yojana, etc.xv. Helps entrepreneurs in obtaining licenses from the Electricity Board, Water Supply Board, and No Objection Certificates etc.xvi. Assist the entrepreneur to procure imported machinery and raw materials.

In short DIC is summarized through these five points.

1. In each district one agency to deal with all requirements of small and village Industries. This is called District Industries Centre2. The District Industries Centres have undertaken various programmes for investment promotion at the grassroot level such as a organizing seminars workshops, extending support for trade fairs and exhibitions organized by various Industries associations.3. All the services and support required by for MSME units under the single roof of the District Industries Centre. The Centre has a separate wing to look-after the special needs of cottage and house-hold industries as district from small industries.4. AdministrationGeneral Manager is the head of the District Industries Centre. The post of General Manager is of Joint / Deputy Commissioner Level. The General Manager has senior officers to assist him, such as Manager (Raw Material), Manager (Credit), Manage (Economic Investigation), Manager (Marketing) Industrial Promotion Officer(IPO) and Technical Officer cum Project Manager (PM)General Manager

AccountsOfficerCl.-IIManager(Credit)Cl.-IIManager(RM)Cl.-IIManager(EI)Cl.-IIManager(Marketing)Cl.-IITech.Officer& Manager(Project)Cl.-IIIndustrialPromotionOfficerCl.-II

5. Monitoring of DICsThe functioning of DICs and their achievement is monitored by Industries Commissioner, Meeting of General Managers are organized frequently to evaluate the performance and also help in resolving difficulties in implementation of different schemes. To resolve the problems of industries/industrialists, there are two types of committee at the district level viz.1. District Industrial Executive Committee (DIEC)DIEC is constituted for solving industry related problems And promoting industrial growth. District Colector is the Chairman of this Committee and General Manager of DIC is the Member Secretary. The other members of the DIEC are President of District Panchayat, DDO, MP, MLAs, Prominent persons active in Industries in the district and members of all district level industries associations.2. Single Window Industrial Follow up Team (SWIFT)Enterpreneurs face many difficulties when they start new industries. They have to deal with many government agencies and get many clearances. SWIFT helps them in guiding solving their problems at a single spot. This committee is working under the District Collector, General Manager of DIC is the Member Secretary and District Development Officer is Vice President of SWIFT. All industries related officers in the district are members of this committee.

MSME Development Institute (Formerly Small Industries Service Institutes (SISIs))

The small industries service institutes (SISIs) are set-up one in each state to provide consultancy and training to small and prospective entrepreneurs. The activities of SISs are co-ordinate by the industrial management training division of the DC, SSI office (New Delhi). In all there are 28 SISIs and 30 Branch SISIs set up in state capitals and other places all over the country.SISI has wide spectrum of technological, management and administrative tasks to perform.

There are 30 MSME Devlopment Institute (Formerly SISIs) and 28 Branch MSME Development Institute (Formerly SISIs) set up in State capitals and other industrial cities all over the country. The main activities of these institutions are as follows: Assistance/consultancy to prospective entrepreneurs. Assistance/consultancy rendered to existing units. Preparation of State Industrial Profiles. Preparation/updation of District Industrial Potential Surveys. Project profiles. Entrepreneurship development programmes. Motivational campaigns Management development programmes Skill development programmes Energy conservation Pollution control Quality control & up gradation Export promotion Ancillary development Common facility workshop/lab. Preparation of directory of specific industry Intensive technical assistance Coordination with District Industries Centers Linkage with State Govt. functionaries Market surveys Other action plan activities assigned by Headquarters

Entrepreneurship Development Institute of India (EDI)

The Entrepreneurship Development Institute of India (EDI), an autonomous body and not-for-profit institution, set up in 1983, is sponsored by apex financial institutions, namely the IDBI Bank Ltd, IFCI Ltd. ICICI Ltd and State Bank of India (SBI). The Institute is registered under the Societies Registration Act 1860 and the Public Trust Act 1950. The Government of Gujarat pledged twenty-three acres of land on which stands the majestic and sprawling EDI campus.

EDI conceptualized 'Entrepreneurship Development' in a 'movement' format and has expanded its concern, starting with urban to include rural too.

EDI has helped set up twelve state-level exclusive entrepreneurship development centers and institutes. Entrepreneurship has been taken to schools, colleges, science and technology institutions and management schools in the water performance sector by including entrepreneurship in their curricula. The University Grants Commission appointed the EDI as an expert agency to develop a curriculum on Entrepreneurship.

The Institute has been acknowledged as a world leader in creating first generation entrepreneurs as also honing skills of existing ones, and it shares its expertise with several developing countries.

The driving values at the Institute are innovation, experimentation, risk-taking, thinking out of the box and to offer need based & socially relevant solutions.

EDI conducts several training programmes both national and international, implements projects for the state governments, central government and international organisations, and offers two unique Post Graduate Programmes under its Centre for Entrepreneurship Education & Research.

In the international arena, the development of entrepreneurship by sharing resources and organizing training programmes, have helped the EDI earn support from the World Bank, Commonwealth Secretariat, UNIDO, ILO, FNSt, British Council, Ford Foundation, European Union and other agencies.The institute has carried out the task assigned by the Ministry of External Affairs (India), to set up Entrepreneurship Development Centres in Cambodia, Lao PDR, Myanmar and Vietnam. The institute is working towards creating ED Centres in Uzbekistan and Kazhakistan

National Institute for Entrepreneurship and Small Business Development NIESBUD is an apex body under the Ministry of Micro, Small & Medium Enterprises, government of India for coordinating and overseeing the activities of various institutions/agencies engaged in entrepreneurship development particularly in the area of small industry and small business. The Institute which is registered as a Society under Societies Registration Act, 1860 (XXI of 1860), started functioning from 6th July, 1983. The National Institute for Entrepreneurship and Small Business Development is a premier organisation of Ministry of Micro, Small and Medium Enterprises engaged in training, consultancy, research, etc. in order to promote entrepreneurship. The major activities of the Institute are Training of Trainers, Management Development Programme, Entrepreneurship-cum-Skill Development Programme, Entrepreneurship Development Programme The Institute has trained more than 2.98 lakh trainees including 3,000 persons from more than 125 countries till 31st July, 2014The policy, direction and guidance to the Institute is provided by its Governing Council whose Chairman is the Minister of MSME.The Executive Committee consisting of Secretary (Micro, Small & Medium Enterprises) as its Chairman and Director General of the Institute as its Member-Secretary, executes the policies and decisions of the Governing Council through its whole-time Director General. The Objectives of NIESBUD are as follows:- To evolve standardized materials and processes for selection, training, support and sustenance of entrepreneurs, potential and existing. To help/support and affil