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PROJECT REPORTONRole of Entrepreneur in Establish the Business Process in an Organisation

Declaration

We hereby declare that the following project report of Entrepreneurship and New Product Development title Role of Entrepreneur in Establish the Business Process in an Organization is an authentic work done by us. This is to declare that all work indulged in the completion of this work such as research, Analysis of activities of an organization is a profound and honest work of ours.

(PGDM 2013-2015) ACKNOWLEDGEMENT

We would like to express my hearty gratitude to my faculty guide, for giving us the opportunity to prepare a project report on Role of Entrepreneur in Establish the Business Process in an Organisation and for his valuable guidance which helped us in completing this project.

PGDM Batch (2013-2015)SRI SIIM

Contents

Role Of An Entrepreneur4Reasons Persons Establish Their Own Businesses5Steps In Establishing A Business6Functional Areas In The Operation Of Businesses8Sources Of Research In Establishing A Business9Process Between Planning And The Operation Of A Business10Regulatory Practices Instituted By Governments10A13dvantages & Disadvantages:Types Of Businesses13Sources Of Capital In Setting Up A Business15Features Of A Business Plan16Purpose Of A Feasibility Study19Ethical And Legal Issues19Consequences Of Unethical And Illegal Practices19THE PROCESS OF ENTREPRENEURSHIP21Entrepreneurial Process:25Importance of Entrepreneurship:27Factors affecting Entrepreneurship:28Types of Entrepreneurs:29Functions of an Entrepreneur:30

Role Of An Entrepreneur

An entrepreneur is one who undertakes the risk of investment to create and market a good or service for financial gains. He is very perceptive and takes advantage of business opportunities that will generate high profits. Entrepreneurs can be sole traders, partners in a business or a group of shareholders.Entrepreneurs are of vital importance to an economy. They are motivated by their own self-interest to make profits and in so doing provide employment, create goods and services and generate revenue impacting on the economys level of national income and hence potential for economic growth.The entrepreneur is a shrewd investor and takes calculated risks i.e. ones that minimize loss when choosing investment opportunities. The entrepreneur is the conceptualizer of the initial business idea. He must identify the best resources that suit the business operation and ensure the efficiency of each resource employed. For example, training workers, using machinery to increase labour productivity, maximizing the use of factory and shop space and borrowing money at low interest rates. The entrepreneur must continuously evaluate the performance of his ventures. Information can be garnered from the balance sheets and Management Information Systems.Personal Qualities of an EntrepreneurEntrepreneurship requires the following characteristics for success:1. Thecreativityto innovate new product and ideas.2. Thedriveanddeterminationto be successful.3. The ability to takecalculated risks.4. Theflexibilityto adapt to changes in the market and industry.5. Verygoal- orientedto purposely and aggressively accomplish task and meet objectives.

Reasons Persons Establish Their Own Businesses

1.Financial Independence

Some persons feel restricted financially with the income received from their job. Starting a business would give them the opportunity to be a successful business person and achieve financial independence.

2.Being your own boss

You are able to make decisions about the direction and operation of the business.

3.To use your skills and knowledge for yourself

The skills, knowledge and experience that you have acquired can be put to work for you.

4.Self-actualization/fulfilment

Owning and operating a successful business will give a feeling of accomplishment.

6.To create employment for relatives, friends and community members

Businesses can assist in providing jobs for persons in communities with high levels of unemployment.

Steps In Establishing A Business

1.Conceptualization

All business ventures begin with the conceptualization of an idea. At this initial stage the product or service idea is envisioned. Most Entrepreneurs identify a need in the market i.e. a service that is not being provided or a product that does not exist. If the product or service already exists then ideas to make improvements may be conceptualized.

2.Research

The entrepreneur is a shrewd investor and takes calculated risks. Before investing money in a business venture a market research must therefore be done to ascertain the extent of the need for the product or service. This helps to minimize losses. A market research involves gathering information about a potential market to help an investor make decisions about entering that market.

3.Identification of resources

What resources are needed to start the business?If the market research is favourable the entrepreneur must now identify the necessary resources to operate business. The resources required are land, labour and capital. Land refers to location or place used to set up a business. This may be bought, rented or family home. Labour employed must be qualified and skilled to efficiently carry out their duties. Capital includes money, raw material and assets such as machinery and equipment.

4.Creation of a business planPreparing a business plan is very important before the start of a business. This will help the business to ascertain whether or not the business will be profitable. A business plan outlines the goals of a business and the strategies that will be employed to achieve them. Usually financial institutions require that a business plan be presented when a loan is requested for business investment.

5.Acquisition of funds

There are several ways of acquiring funds to start a business. There are a myriad of financial institutions that are willing to assist small businesses once their business plans are deemed workable. The investor must weigh the advantages and disadvantages of acquiring funds from the various financial institutions. The cost of borrowing i.e. the interest rate charged and the length of the repayment period are factors to consider.Funds may be borrowed from friends and relatives that may attract a lower or no repayment cost and a more flexible repayment schedule. Funds can also be acquired from personal savings. Encouraging partners or selling shares are ways of avoiding high costs of capital.

6.Operation of a business

A business must be efficiently operated to ensure high quality goods and service. This is important to keep existing customers and for business growth. Many companies employ an operation manager to design and oversee its operations. This person develops and manages the various processes used to create goods and services efficiently to ensure customer satisfaction.

Functional Areas In The Operation Of Businesses

Departments in a business organization are structured according to certain functions. The departments of various organizations will differ depending on the type of business.

Production

The production department is responsible for transforming raw materials into finished products. They are also responsible for quality control to ensure that required standards are met.

Finance/Accounts

The accounts department makes and receives all payments on behalf of the business and records all financial transactions

Marketing

This department creates awareness for the firm products and motivates consumers to buy. They also carry out market research to identify customers needs

Human Resources/Personnel

The human resource department recruits and selects staff for the business organization.They are also responsible for staff training and welfare.

The Purchasing Department

This department is responsible for the purchasing of the firms raw material, stationery and goods for re-sale.

Customer Service/ Customer Relations DepartmentThis Department bridges the gap between a business and its customers. it deals with customers queries, advising and assisting customers to place orders and handling customers complaints.

Legal DepartmentThis department is concerned with legal problems that might arise for the company. For example, compensation for employees and customers, who have brought lawsuits against the company.

Research and Development (R&D)

This department is involved with research to explore ways of improving the companys existing products, developing new ones and identifying efficient processes to increase production. This department works closely with the marketing department as products developed must satisfy consumers needs.

Sources Of Research In Establishing A Business

Firms embark on research to uncover information about consumer preferences, the level of competition in the market, responses to advertisement etc.

Sources of Information

Data may be collected from primary or secondary sources.

(a)Primary Data

Primary data is originally collected data. This data will be obtained by interviewing, observing or distributing questionnaires to the sample population.

(b) Secondary Data

Secondary data is information that has already been collected by someone else originally. This data will be therefore obtained from books, newspapers, magazines, libraries and publications of various institutions.

Process Between Planning And The Operation Of A Business

Managers must continue to plan in order to ensure that its operations meet all long term, medium- term and short- term goals.Long- term plansare made for 3 to 5 year periods. Long-term plans determine the direction of the company. These plans set out the firms overall strategy to move from its present position to where it intends to be. Long-term plans include expansion plans and plans to create new products and services. Long-term plans are made by the directors or persons in senior management positions of a company.Medium-term plansrange from 1 to 2 years. They are made by department managers or persons in middle management positions. Medium term plans include increasing the efficiency of a department in order to increase the quality and quantity of output. This would involve implementing training programmes for staff and identifying equipment that would increase efficiency.Short-term plansare made daily, weekly and monthly by supervisors or persons in lower level management positions. These plans are centred on meeting daily, weekly and monthly production targets.

Regulatory Practices Instituted By Governments

A business is not considered a legal entity if it is not registered as business in the country where it operates. All persons desirous of starting a business must first be registered with the government agency authorized to carry out registration of business in their country.A sole trader only needs to register his business by meeting the requirements outlined for sole traders by the registering office and filling out the required documents.Partnerships are also registered by the completion of a registration document. The names of all the partners must be listed on the document. Partners in a business are advised to draft a Deed of Partnership. This document sets out all the rules that govern the partnership and will thus help to prevent conflict among partners.The formation of public and private limited liability companies involves the preparation of a number of documents.The Companies Act contains the laws relating to companies. To comply with certain requirements which were laid down by the Companies Act, the promoters of the company must present the following documents:

1.The Memorandum of Association this document governs the companys relationship with the outside world. It contains:(a) The name of the company(b) The address of the registered office(c) The objectives of the A statement of limited liability to members(d) The amount of capital to be raised by the selling of shares and the types of shares to be issued(e) The number of shares to be taken by the directors(f) Statement of intent to form a limited liability

2.Articles of Association this document contain the internal rules and regulations which govern the company. It contains:(a) The rights and obligations of the directors(b) The procedures for calling an annual general meeting(c) Procedures for electing directors(d) The borrowing powers of the companyIn order to effect the registration of a company, the Memorandum and Articles of Association must be prepared by a lawyer or any person named in the articles as a director or company secretary and sent to the companies registering office.

3.Statutory Declaration this document states that the promoters of the company have compiled with the Companies Act. It is a signed statement from each director certifying their willingness to serve.

4.Certificate of Incorporation

Once all three documents above have been submitted and the Registrar of Companies is satisfied that all is in order, it will enter the name of the company on the register, and issue a certificate of incorporation. Thecertificate of incorporationis proof that all requirements of the Companies Act have been complied with. The certificate of incorporation establishes the firm as a legal body.

5.The Incorporated Company

A company always means an incorporated company. If a company is not incorporated, it is really a large partnership. Every business that has more than twenty shareholders must be registered as an incorporated company.The advantage of incorporation is that each members liability is limited. At this stage it is only the private limited company that may begin trading.

6.The Prospectus

The public limited liability company must first publish its prospects inviting the public to subscribe for shares. This may be a publication in the newspaper or in another public media. The prospectus will contain information on the assets, liabilities and profit levels of the company.

7.Certificate of Trading

Once the public limited liability company has collected the total amount of share capital stated in the memorandum, the company will then be issued with a Certificate of Trading. This will allow the company to start trading.

Advantages & Disadvantages:Types Of Businesses

Sole Traders

AdvantagesBenefits of operating alone are: all profits are taken by the owner. Consultations are not necessary for decision making and the legal requirements for start-up is very simple as the proprietor only needs to submit the registration documents for the business.

DisadvantagesThe sole proprietor must work for long hours resulting in little time for family. There is also limited capital to inject into the business and he alone bears all the risk of the business. He does not have limited liability and therefore if the business goes bankrupt he may lose his personal assets e.g. house and car. There is a lack of expertise in areas of business where he is not knowledgeable which may limit its success.Partnership

Advantages

Since more than one person is involved, more capital can be raised to inject into the business. There is more expertise and work load is shared. The risk of the business operation is also shared.

Disadvantages

All partners will be affected by the action of each partner since each person represents the business. Decision making may be very slow if partners are not in agreement. There are high risks for partners who do not have limited liability.

Private Limited Liability Company

Advantage

A main advantage of limited liability companies is that their shareholders enjoy limited liability. This type of business is assured continuity of existence as it has several members. Unlike the sole trading business that comes to an end if the owner dies or is very ill. This firm can access capital for expansion by selling shares. This business also has privacy as its balance sheet does not have to be published.

Disadvantage

The disadvantage is that they are not easy to start due to the number of legal procedures required. For the private limited liability company, shares are not easily transferable as other members must agree to have persons join the company. However, shareholders in public liability companies are not restricted to sell their shares to whomever they wish to.

Public Limited Liability Company

Advantages

A main advantage of limited liability companies is that their shareholders enjoy limited liability. This type of business is assured continuity of existence as it has several members. Unlike the sole trading business that comes to an end if the owner dies or is very ill. This firm can access capital for expansion by selling shares. Note that these advantages are similar to the private limited company. However, added advantages are that shares are easily transferrable as they may be sold to anyone on the stock market and it provides a means of investment for shareholders who buy shares at low prices and sell when stock prices rise.

Disadvantage

The disadvantage however, are that they are not easy to start due to the number of legal procedures required and that the large size of these businesses tend to be difficult to manage.

Sources Of Capital In Setting Up A BusinessCapital is one of the resources required to set up a business establishment.Capital mainly refers to those assets that are used to start and continuously operate a business.Fixed capitalincludes machinery, equipment and vehicles owned by the company. These assets are so called because they cannot easily be turned into cash.Circulating capitalincludes raw materials, finished and semi-finished, goods, bank and cash balances. These assets can easily be converted into cash.

Sources of Capital- Personal savings of the owner or owners- Assistance from friends and family- Loan from a financial institution- Selling shares

The significance of collateral in accessing capital to establish a businessCollateral is anything of value that is used to secure a loan. It is required by financial institutions for the approval of loans. If the loan is not repaid then the financial institution has the authority to seize the borrowers collateral. Forms of collateral include: bank balances, motor vehicle, dwelling house, land, machinery and equipment etc.

Features Of A Business Plan

A business plan is a document outlining the goals of a business and the strategies to achieve these goals. It is mainly prepared by new businesses or by ones making major changes.

Executive Summary

The Executive Summary is a synopsis of the full business plan. It presents the salient points of the plan. It contains information on the purpose of the business, its methods of operation and future expectations.

History of the business

This section gives full details on previous operations of a business. For a new business it will explain where the idea came from and the reasons for starting the business.

Mission Statement

The Mission Statement gives the overall goal of a business as well as its values. It serves as a guide to the operation o the business. For example: providing the highest quality goods and services.

Business goals and objectives

The firms short-term, medium-term and long-term goals and the time in which these are to be achieved is outlined in this section.

Organization

The business must state the ownership structure and give details of the management team.

SWOT Analysis

Looks at the strength and weaknesses of the businessE.g. Strengths strategic location, years of experienceWeakness Loans at affordable interest rates,

Industry Analysis

How has the industry changed in the past few years and who are the other firms in the industry.

Product /Service Description

Describe clearly the product or service that you will be offering.

Market Analysis

Describe your target market and your competitors.

Marketing Strategy

Explain the various promotional, pricing and distribution strategies.

Operations

Explain how the business will function on a day-to-day basis. For example: Procurement of raw materials, the use of technology and operating methods.Sales Forecast

What amount of sales the business expects to make on a monthly basis.

Start up Cost

The total amount needed to start the new business, giving a detailed description of what the money will be used for.

Operating costs

E.g. fixed Costs (rent, insurance and salary) and variable costs (utilities and wages)

Projected Cash Flow

An estimate of how much you expect to earn periodically once you start operating.

Acquisition of Funds

Information on how funds will be obtained e.g. personal savings, borrowing from friends and family, borrowing from financial institutions or by selling shares

Purpose Of A Feasibility Study

It is research done to ascertain the viability/feasibility of a business idea or any other venture. It asses the business idea in terms of its operational costs, expected revenue flows, level of competition etc. Its main purpose is to find out if the business idea will be workable. If the business idea is found to be feasible a business plan is may drafted to obtain financial support.

Ethical And Legal IssuesBusiness owners are required to obey all legislation concerning the operations of a business. These include, paying taxes, business registration, obtaining licenses when required etc. Business owners should also operate their business based on integrity. This involves:- Environmental awareness reducing pollution and harmful effluents in the rivers and seas.- Avoiding tied selling (marrying of goods)- Misleading advertising (untruths about goods advertised)- Untrue sale price For example, writing the word sale on items for which the price remains the same.- The use of market dominance to squeeze firms out of the industry- For example large firms may drop the price of their goods so low that small firms are unable to compete with them.

Consequences Of Unethical And Illegal Practices

Illegal business practices will result in legal consequence for business. This may include large fines the loss of the business. Legislation also protects consumers, competitors and society from unethical practices of a business.

Successful entrepreneurs are usually modeled as combinations of innovators (with creative and innovative flair) and managers (with strong general management skills, business know-how, and sufficient contacts). Over the years, economists have, however, described more roles of entrepreneurs. The following is a summary ofthe economists'interesting discourse that, aspiring entrepreneurs may, hopefully, find useful.

Entrepreneur as risk-taker

Richard Cantillon (1680-1734) suggested that an entrepreneur is someone who has the foresight and willingness to assume risk and take the requisite action to make a profit (or loss). Cantillons entrepreneur is forward-looking, risk-taking, alert though need not be innovative in the strict sense.Two different kinds of risk were distinguished by Frank Knight (1885-1972): one is capable of being measured (i.e., objective probability that an event will happen) and shifted from the entrepreneur to another party by insurance; the other is un-measurable (i.e., no objective measure of probability of gain or loss), e.g., the inability to predict consumer demand. According to Knight, the entrepreneur takes the latter risk: true uncertainty found in situations, which do not repeat themselves with sufficient conformity to make possible a computation of probability (what we nowadays term as "unknown and unknowable").Entrepreneur as business manager

Frank Knight established a boundary between management and entrepreneurship. He sees entrepreneurs in the strict sense as producers; while the great mass of population furnish them with productive services, placing their persons and property at the disposal of entrepreneurs who guarantee to them a fixed remuneration. Entrepreneurial profit depends on whether an entrepreneur can make productive services yield more than the price fixed upon them by those who furnish productive services think they can make them yield. Therefore, its magnitude is based on a margin of error in calculation by entrepreneurs and non-entrepreneurs who do not force the entrepreneurs to pay as much for productive services as they could be forced to pay. It is this margin of error in judgment that constitutes true uncertainty that is borne by the true entrepreneur and which results in his profit. In Knights view, the function of manager thus does not itself imply entrepreneurship.Entrepreneur as exceptional leader

Hans Karl Emil von Mangoldt(1824-1868) developed the notion that entrepreneurial profit is the rent of ability. He divided entrepreneurial income into three parts: (1) a premium on uninsured risks; (2) entrepreneur interest and wages, including only payments for special forms of capital or productive effort that did not admit of exploitation by anyone other than the owner; and (3) entrepreneurial rents or payments for differential abilities or assets not held by anyone else. The first part is a return on risk taking; the second part from capital use and production effort, and the third part from ability or asset specificity. Alfred Marshall (1842-1924) carried forward Mangoldts notion of rent-of-ability by adding the element of leadership to entrepreneurial responsibilities. Marshalls entrepreneurs must be a natural leader of men who can choose assistants wisely but also exercise a general control over everything and preserve order and unity in the main plan of business. In fulfilling this organizational function, the entrepreneur must always be on the lookout for methods that promise to be more effective in proportion to their cost than methods currently in use. Marshall noted that not everyone had the innate ability to perform this entrepreneurial role as these abilities are so great that very few persons can exhibit all of them in a very high degree. Accordingly, he termed the entrepreneurial rents specifically as a quasi-rent, which is a return for exceptional natural abilities, which are not made by human effort, and enable the entrepreneur to obtain a surplus income over what ordinary persons could expect for similar exertions following similar investments of capital and labour in their education and start in life.Entrepreneur as perceiver/restorer

John Bates Clark(1847-1938) noted that as static conditions change over time: population grow, wants change, and improved production technologies are discovered and implemented, the mobility of capital and labour is necessary to restore new equilibrium. He sees the entrepreneur as the human agent responsible for the coordination that restores the economy to an equilibrium position. For Israel Kirzner (1930- ), knowledge is never complete or perfect in a dynamic economy; markets are constantly in states of disequilibrium and it is disequilibrium that bars the return to equilibrium. Kirzner focused on the discovery process by which entrepreneurs discover error and new profitable opportunities, and thus move the market toward equilibrium. Therefore, the role of the entrepreneur is to achieve the kind of adjustment necessary to move economic markets toward the equilibrium state. According to Kirzner, the essence of entrepreneurship consists of the alertness to profit opportunities. By stressing alertness, Kirzner emphasizes the quality of perception, perceiving an opportunity that is a sure thing.

THE PROCESS OF ENTREPRENEURSHIP

The myths that have grown up around the great entrepreneurs in America have focused more on the personality of the individual than on the work that he or she did to create a prosperous organization. What sticks in our memories are the qualities of a great entrepreneur, those personality traits that "make" a great businessperson. Successful entrepreneurs, however, work hard to build their organizations, starting from little and undertaking a process that results in a thriving business. Even the best ideas become profitable only because the entrepreneur went through the steps necessary to build a company from the ground up. Successful new ventures do not appear magically out of the swirl of the marketplace; they are planned, created, and managed.It is important to understand some of the stages a businessperson must go through in order to create a successful entrepreneurial venture. All entrepreneurs go through three very general stages in the process of creating their ventures: a concept formation stage where ideas are generated, the innovation and opportinity are identified, and the business begins to take shape; a resource gathering stage where necessary resources are brought together to launch the new business; and a stage where the organization is actually created.

CONCEPTFORMATIONBefore any business opens its doors, it must make crucial decisions about the way the business will be run. This first step in the entrepreneurial process is where the entrepreneur determines what kind of potential market exists for the business and forms a rough idea of how to penetrate the existing market. During the concept formation stage, the entrepreneur must answer hard questions about the potential business as well as his or her own motivations for starting his or her own business. The answers to these questions will provide the framework for future planning, growth, and innovation.There is a great deal that is unknown to the entrepreneur before he or she starts out. The viability of the venture depends on the individual's ability to lessen that which is unknown and maximize that which is known. The central question an entrepreneur should ask him or herself during the idea generation stage is whether there is actually an opportunity for a successful venture. That is, will starting a new business enable the entrepreneur to accomplish things or meet personal and professional goals that he or she might not otherwise meet? Some entrepreneurs want to make a certain return on their efforts and investment or are looking to run a business that will afford them a certain lifestyle. Others are looking to capture a certain percentage of the market and thus increase their wealth. Still others go into business for themselves because it would afford them the independence and freedom that working for someone else would not. Before taking the plunge, prospective entrepreneurs should investigate the extent to which their envisioned business will give them an opportunity to meet their goals.A new business can be opened by anyone with the capital and time to do it. Nevertheless, businesses that will be successful for years to come must maintain a certain level of financial soundness. Among the first questions an entrepreneur should ask are those that explore the potential profitability of the venture. The entrepreneur should be able to estimate sales and selling expenses as well as other costs of doing business. In order to develop a sense of the economic feasibility of a venture, the entrepreneur should investigate the size and other characteristics of the potential market for the product or service, including competitive pressures and capital start-up requirements. Quantitative analysis of the opportunity is a vital part of the conceptualization of the business. The results of "running the numbers" and creating a set of figures with which the future can be planned will enable the entrepreneur to determine whether the potential business will be profitable. "There is no more luck in becoming successful at entrepreneurship than in becoming successful at anything else," wrote William D. Bygraves inThe Portable MBA in Entrepreneurship."In entrepreneurship, it is a question of recognizing a good opportunity when you see one and having the skills to convert that opportunity into a thriving business. To do that, you must be prepared. So in entrepreneurship, just like any other profession, luck is where preparation and opportunity meet."

RESOURCE GATHERING

The first stage of the entrepreneurship process should give the individual enough information to decide whether or not the business has the capacity to meet the individual's personal and professional goals. Once the decision has been made, the entrepreneur may: 1) continue to work in his or her present employment capacity; 2) begin looking for a new entrepreneurial opportunity that is a better fit; or 3) beings the second step in the entrepreneurial process, that of gathering the necessary resources.Without a sufficient supply of resources the opportunity might never be turned into a business that makes money for the entrepreneur. In the resource gathering stage the entrepreneur begins to assemble the tools that he or she will need to make the business idea a successful one. In general, a person has to gather three types of primary resources: capital, human/managerial, and time. Capital can be financial (in the form of cash, stock ownership, or loans), intellectual (patents, trademarks, brand names and copyrights), and technical (innovations in design or production that competitors can not or will not duplicate). Human resources refers to the individuals who will help the entrepreneur take advantage of the opportunity, either as employees of the new organization or as paid and unpaid counselors. In order to create a viable organization, an entrepreneur has to be ready and able to manage the resources at his or her disposal, bringing them together in advantageous, efficient ways that meet the needs of the fledgling organization.An often-overlooked consideration in the resource gathering stage is time. Many entrepreneurial ventures that manage to succeed do so in part because they were launched at an opportune time, and because their founders were able to carve out an adequate amount of timea most valuable resource, after allto attend to the myriad start-up needs of the business. For instance, a business based on a patented technological innovation has a certain amount of time to operate before the patent expires and competitors can duplicate the innovation. When the patent expires, the competitive advantage held by the business is diminished or gone. Other businesses may be based on selling to an emerging market. The entrepreneur who runs the business has a certain amount of time before potential competitors notice that the business is (or will be) profitable. In that time framethe window of opportunitythe entrepreneur who found the opportunity must manage resources so that the business is established and protected from the threat of competition. In such instances, however, the would-be entrepreneur also needs to avoid the common mistake of rushing in to take advantage of the opportunity without adequately addressing all of the various elements that produce a successful start-up.

ORGANIZATION CREATION AND DEVELOPMENT

This stage of the entrepreneurial process is the actual establishment and opening of the business. During this stage, the entrepreneur goes from being just avisionaryto a visionary with a business to run. One way to examine the changing managerial activities of the entrepreneur is to look at the different roles filled by the entrepreneur as the business develops. As the founder of the organization, the entrepreneur sets thephilosophyof the organization, establishes the strategic focus, and educates new employees. In this role, the entrepreneur lays the groundwork for the emerging corporate culture. In addition, most entrepreneurs serve as the primary promoters for their new start-ups. They must act as the new venture's chief spokesperson in contacts with financial backers, prospective clients, employees, suppliers, and others. In addition, as founders (or founding team members) of organizations, entrepreneurs are often called upon to provide counsel or advice to community members or employees. The roles that an entrepreneur must fill demand flexibility and creativity. In order to successfully manage a new venture, an entrepreneur must be comfortable in all the roles.

Entrepreneurial Process:

Entrepreneurship is a process, a journey, not the destination; a means, not an end. All the successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway), Gordon Moore (Intel) Steve Jobs (Apple Computers), Jack Welch (GE) GD Birla, Jamshedji Tata and others all went through this process.To establish and run an enterprise it is divided into three parts the entrepreneurial job, the promotion, and the operation. Entrepreneurial job is restricted to two steps, i.e., generation of an idea and preparation of feasibility report. In this article, we shall restrict ourselves to only these two aspects of entrepreneurial process.

Figure 4.1: The Entrepreneurial Process1. Idea Generation:To generate an idea, the entrepreneurial process has to pass through three stages:a. Germination:This is like seeding process, not like planting seed. It is more like the natural seeding. Most creative ideas can be linked to an individuals interest or curiosity about a specific problem or area of study.b. Preparation:Once the seed of interest curiosity has taken the shape of a focused idea, creative people start a search for answers to the problems. Inventors will go on for setting up laboratories; designers will think of engineering new product ideas and marketers will study consumer buying habits.c. Incubation:This is a stage where the entrepreneurial process enters the subconscious intellectualization. The sub-conscious mind joins the unrelated ideas so as to find a resolution.2. Feasibility study:Feasibility study is done to see if the idea can be commercially viable.It passes through two steps:a. Illumination:After the generation of idea, this is the stage when the idea is thought of as a realistic creation. The stage of idea blossoming is critical because ideas by themselves have no meaning.b. Verification:This is the last thing to verify the idea as realistic and useful for application. Verification is concerned about practicality to implement an idea and explore its usefulness to the society and the entrepreneur.Importance of Entrepreneurship:Entrepreneurship offers the following benefits:Benefits of Entrepreneurship to an Organisation:1. Development of managerial capabilities:The biggest significance of entrepreneurship lies in the fact that it helps in identifying and developing managerial capabilities of entrepreneurs. An entrepreneur studies a problem, identifies its alternatives, compares the alternatives in terms of cost and benefits implications, and finally chooses the best alternative.This exercise helps in sharpening the decision making skills of an entrepreneur. Besides, these managerial capabilities are used by entrepreneurs in creating new technologies and products in place of older technologies and products resulting in higher performance.2.Creation of organisations:Entrepreneurship results into creation of organisations when entrepreneurs assemble and coordinate physical, human and financial resources and direct them towards achievement of objectives through managerial skills.3.Improving standards of living:By creating productive organisations, entrepreneurship helps in making a wide variety of goods and services available to the society which results into higher standards of living for the people.Possession of luxury cars, computers, mobile phones, rapid growth of shopping malls, etc. are pointers to the rising living standards of people, and all this is due to the efforts of entrepreneurs.4.Means of economic development:Entrepreneurship involves creation and use of innovative ideas, maximisation of output from given resources, development of managerial skills, etc., and all these factors are so essential for the economic development of a country.Factors affecting Entrepreneurship:Entrepreneurship is a complex phenomenon influenced by the interplay of a wide variety of factors.Some of the important factors are listed below:1.Personality Factors:Personal factors, becoming core competencies of entrepreneurs, include:(a) Initiative (does things before being asked for)(b) Proactive (identification and utilisation of opportunities)(c) Perseverance (working against all odds to overcome obstacles and never complacent with success)(d) Problem-solver (conceives new ideas and achieves innovative solutions)(e) Persuasion (to customers and financiers for patronisation of his business and develops & maintains relationships)(f) Self-confidence (takes and sticks to his decisions)(g) Self-critical (learning from his mistakes and experiences of others)(h) A Planner (collects information, prepares a plan, and monitors performance)(i) Risk-taker (the basic quality).2.Environmental factors:These factors relate to the conditions in which an entrepreneur has to work. Environmental factors such as political climate, legal system, economic and social conditions, market situations, etc. contribute significantly towards the growth of entrepreneurship. For example, political stability in a country is absolutely essential for smooth economic activity.Frequent political protests, bandhs, strikes, etc. hinder economic activity and entrepreneurship. Unfair trade practices, irrational monetary and fiscal policies, etc. are a roadblock to the growth of entrepreneurship. Higher income levels of people, desire for new products and sophisticated technology, need for faster means of transport and communication, etc. are the factors that stimulate entrepreneurship.Thus, it is a combination of both personal and environmental factors that influence entrepreneurship and brings in desired results for the individual, the organisation and the society.Types of Entrepreneurs:Depending upon the level of willingness to create innovative ideas, there can be the following types of entrepreneurs:1. Innovative entrepreneurs:These entrepreneurs have the ability to think newer, better and more economical ideas of business organisation and management. They are the business leaders and contributors to the economic development of a country.Inventions like the introduction of a small car Nano by Ratan Tata, organised retailing by Kishore Biyani, making mobile phones available to the common may by Anil Ambani are the works of innovative entrepreneurs.2.Imitating entrepreneurs:These entrepreneurs are people who follow the path shown by innovative entrepreneurs. They imitate innovative entrepreneurs because the environment in which they operate is such that it does not permit them to have creative and innovative ideas on their own.Such entrepreneurs are found in countries and situations marked with weak industrial and institutional base which creates difficulties in initiating innovative ideas.In our country also, a large number of such entrepreneurs are found in every field of business activity and they fulfill their need for achievement by imitating the ideas introduced by innovative entrepreneurs.Development of small shopping complexes is the work of imitating entrepreneurs. All the small car manufacturers now are the imitating entrepreneurs.3.Fabian entrepreneurs:The dictionary meaning of the term fabian is a person seeking victory by delay rather than by a decisive battle. Fabian entrepreneurs are those individuals who do not show initiative in visualising and implementing new ideas and innovations wait for some development which would motivate them to initiate unless there is an imminent threat to their very existence.4.Drone entrepreneurs:The dictionary meaning of the term drone is a person who lives on the labor of others. Drone entrepreneurs are those individuals who are satisfied with the existing mode and speed of business activity and show no inclination in gaining market leadership. In other words, drone entrepreneurs are die-hard conservatives and even ready to suffer the loss of business.5.Social Entrepreneur:Social entrepreneurs drive social innovation and transformation in various fields including education, health, human rights, workers rights, environment and enterprise development.They undertake poverty alleviation objectives with the zeal of an entrepreneur, business practices and dare to overcome traditional practices and to innovate. Dr Mohammed Yunus of Bangladesh who started Gramin Bank is a case of social entrepreneur.Functions of an Entrepreneur:The important functions performed by an entrepreneur are listed below:1. Innovation:An entrepreneur is basically an innovator who tries to develop new technology, products, markets, etc. Innovation may involve doing new things or doing existing things differently. An entrepreneur uses his creative faculties to do new things and exploit opportunities in the market. He does not believe in status quo and is always in search of change.2.Assumption of Risk:An entrepreneur, by definition, is risk taker and not risk shirker. He is always prepared for assuming losses that may arise on account of new ideas and projects undertaken by him. This willingness to take risks allows an entrepreneur to take initiatives in doing new things and marching ahead in his efforts.3.Research:An entrepreneur is a practical dreamer and does a lot of ground-work before taking a leap in his ventures. In other words, an entrepreneur finalizes an idea only after considering a variety of options, analyzing their strengths and weaknesses by applying analytical techniques, testing their applicability, supplementing them with empirical findings, and then choosing the best alternative. It is then that he applies his ideas in practice. The selection of an idea, thus, involves the application of research methodology by an entrepreneur.4.Development of Management Skills:The work of an entrepreneur involves the use of managerial skills which he develops while planning, organizing, staffing, directing, controlling and coordinating the activities of business. His managerial skills get further strengthened when he engages himself in establishing equilibrium between his organization and its environment.However, when the size of business grows considerably, an entrepreneur can employ professional managers for the effective management of business operations.5.Overcoming Resistance to Change:New innovations are generally opposed by people because it makes them change their existing behavior patterns. An entrepreneur always first tries new ideas at his level.It is only after the successful implementation of these ideas that an entrepreneur makes these ideas available to others for their benefit. In this manner, an entrepreneur paves the way for the acceptance of his ideas by others. This is a reflection of his will power, enthusiasm and energy which helps him in overcoming the societys resistance to change.6.Catalyst of Economic Development:An entrepreneur plays an important role in accelerating the pace of economic development of a country by discovering new uses of available resources and maximizing their utilization.3