material unit 1

1. ENTREPRENEUR
1.1 MEANING:
An entrepreneur is one of the important segments of economic growth. Basically he is a person
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 puts up new green field projects that create wealth, open up many employment
opportunities and leads to the growth of other sectors.
The word ‘entrepreneur’ is derived from the French verb entreprendre. It means “ to undertake”.
In the early 16th
century, the Frenchmen who organized and led military expeditions were referred to as
“entrepreneurs”, Around 1700 A.D., the term was used for architects and contractors of public works.
The term “ entrepreneur” was applied to business initially by the French economist, Caltillon, in
the 18th
century, designate a dealer who purchases the means of production for combining them into
marketable products. Another Frenchman J.B. Say, expanded Cantillon’s ideas and conceptualized the
entrepreneur as an organizer of a business firm, central to its distributive and production functions.
Beyond stressing the entrepreneur’s importance to the business, Say did little with his entrepreneurial
analysis.
According to J.B.Say, an entrepreneur is the economic agent who unties all means of production,
the labour force of the one and the capital or land of the other and who finds in the value of the
products his results from their employment, the reconstitution of the entire capital that he utilizes and
the value of the wages, the interest and the rent which he pays as well as profit belonging to himself. He
emphasized the functions of co- ordination, organization and supervision. Further, it can be said that the
entrepreneur is an organizer and speculator of a business enterprise. The entrepreneur lifts economic
resources out of an area of lower into an area of higher productivity and greater.
The New Encyclopaedia Britannica considers an entrepreneur as “ an individual who bears the risk
of operating a business in the face of uncertainty about the future condition.

2. As professor Jan Tin Bergen points out “ The best entrepreneur in any developing country is not
necessarily the man who uses much capital, but rather the man who knows how to organize the
employment and training of his employees. Whoever concentrates on this is rendering a much more
important service to his country than the man who uses huge capital.
Joseph A. Schumpeter thus writes “ The entrepreneur in an advanced economy is an individual
who introduces something new in the economy- a method of production not yet tested by experience in
the branch of manufacture concerned, a product with which consumers are not yet familiar, a new
source of raw material or of new markets and the like’
Briefly, an entrepreneur is one who innovates, raises money, assembles inputs, chooses managers
and sets the organization going with his ability to identify them. Innovation occurs through (1) the
introduction of a new quality in a product (2) a new product(3) a discovery of a fresh demand and a
fresh source of supply and (4) by changes in the organization and management.
New Concept of Entrepreneur – The term “entrepreneur” has been defined as one who detects
and evaluates a new situation in his environment and directs the making of such adjustments in the
economic system as he deems necessary. He conceives of an industrial enterprise for the purpose,
displays considerable initiative, grit and determination in bringing his project to fruition and in this
process, performs one or more of he following.
• Perceives opportunities for profitable investment
• Explores the prospects of starting such a manufacturing enterprise
• Obtains necessary industrial licenses
• Arranges initial capital
• Provides personal guarantees to the financial institutions
• Promises to meet the shortfalls in the capital and
• Supplies technical know-how.
The term “entrepreneur’ is to be understood in its totality and not in a fabricated manner. The
term “entrepreneur’ can only be understood with a bearing on economic, psychological, sociological and
cultural bearings. The social responsibility is essentially a part of entrepreneurial outlook on life.

3. Fig:1Fig:1 Basics of an EntrepreneurBasics of an Entrepreneur
ORGANISATION
INNOVATION
URGE RISK
SKILL ENTERPRISE
VISION
GROWTH
MANAGEMENT
So, “Entrepreneurs are individuals motivated by a will for power, special characteristics being an
inherent capacity to select correct answers, energy, will and mind to overcome fixed talents of thoughts,
and a capacity to withstand social opposition”.
1.2 Characteristics of an entrepreneur:
A successful entrepreneur must be a person with technical competence, initiative, good
judgment, intelligence, leadership qualities, self confidence, energy, attitude, creativeness, fairness,
honesty, tactfulness and emotional stability.
Mental ability: Mental ability consists of intelligence and creative thinking. An entrepreneur must be
reasonably intelligent and should have creative thinking and must be able to engage in the analysis of
various problems and situations in order to deal with them. The entrepreneur should anticipate changes
and must be able to study the various situations under which decision have to be made.

4. Clear objectives: An entrepreneur should have clear objectives as to the exact nature of the goods to be
produced and subsidiary activities to be undertaken. A successful entrepreneur may also have the
objective to establish the products, to make profit or to render social service.
Business secrecy: An entrepreneur must be able to guard business secrets. Leakage of business secrets
to trade competitors is a serious matter which should be carefully guarded against by an entrepreneur.
An entrepreneur should be able to make a proper selection of his assistants.
Human relations ability: The most important personality traits contributing to the success of an
entrepreneur are emotional stability, personal relations, consideration and tactfulness. An entrepreneur
must maintain good relations with his customers if he is to establish relations that will encourage them
to continue to patronize his business. He must also maintain good relations with his employees if he is to
motivate them to perform their jobs at a high level of efficiency. An entrepreneur who maintains good
human relations with customers, employees, suppliers, creditors and the community is much more likely
to succeed in his business than the individual who does not practice good human relations. Human
relations ability can also be referred to as tactfulness.
Fig: 2 Characteristics of an Entrepreneur

5. Communication ability: Communication ability is the ability to communicate effectively. Good
communication also means that both the sender and the receiver understand each other and are being
understood. An entrepreneur who can effectively communicate with customers, employees, suppliers
and creditors will be more likely to succeed than the entrepreneur who does not.
Technical knowledge: An entrepreneur must have a reasonable level of technical knowledge. Technical
knowledge is the one ability that most people are able to acquire if they try hard enough.
An entrepreneur who has a high level of administrative ability, mental ability, human relation
ability, communication ability and technical knowledge stands a much better chance of success than his
counterpart who possesses low levels of these basic qualities.
Some key characteristics of a successful entrepreneur are:

6. Motivator: An entrepreneur must build a team, keep it motivated and provide an environment for
individual growth and career development.
Self confidence: Entrepreneurs must have belief in themselves and the ability to achieve their goals.
Long term involvement: An entrepreneur must be committed to the project with a time horizon of five
to seven years. No ninety- day wonders are allowed.
High energy level: Success of an entrepreneur demands the ability to work long hours for sustained
periods of time.
Persistent problem solver: An entrepreneur must have an intense desire to complete a task or solve a
problem. Creativity is an essential ingredient.
Initiative: An entrepreneur must have initiative accepting personal responsibility for actions and above
all make good use of resource.
Goal setter: An entrepreneur must be able to set challenging but realistic goals.
Modern risk taker: An entrepreneur must be a moderate risk taker and learn from any failures.
These personal traits go a long way in making an entrepreneur a successful man or woman.
2.1 Concept of Entrepreneurship
Schumpter (1934) Entrepreneurship is seen as new combinations including the doing of
new things or the doing of things that are already being done in a new
way. New combinations include 1)introduction of new good, 2)new

7. method of production, 3)opening of a new market, 4)new source of
supply, 5)new organizations. Entrepreneur disrupts equilibrium.
Penrose (1959) Distinguished between entrepreneurial and managerial services. ESs
refer to those contributions to the operations of a firm which relate to
the introduction and acceptance on behalf of the firm of new ideas such
as new products, locations, significant changes in technology,
acquisition of new management personnel, fundamental changes in the
administrative organization, raising capital, making of plans for
expansion. Managerial services execute entrepreneurial services.
Entrepreneurs provides ESs.
Kirzer (1973) The entrepreneur is a decision maker whose entire role arises out of his
alertness to unnoticed opportunities; therefore, entrepreneurship is the
ability to perceive new opportunities. This recognition and seizing of
the opportunity will tend to “correct” the market and bring it back
toward equilibrium. “Entrepreneurial Discovery”
Drucker (1985) Entrepreneurship is an act of innovation that involves endowing existing
resources with new wealth producing capacity.
Rumelt (1987) Entrepreneurship is the creation of new businesses. New business
meaning that they do not exactly duplicate existing businesses but have
some element of novelty.
Low & MacMillan (1988) Entrepreneurship is the creation of new enterprise.
Gartner (1988) Entrepreneurship is the creation of organizations, the process by which
new organizations come into existence. Entrepreneurship ends when
the creation stage of the organization ends.
Stevenson et al. (1989) Entrepreneurship is the pursuit of an opportunity w/o concern for
current resources or capabilities.

8. Amit, Glosten & Muller (1993) Entrepreneurship is the process of extracting profits from new, unique,
and valuable combinations of resources in an uncertain and ambiguous
environment.
Timmons (1994) Entrepreneurship is creating and building something of value from
practically nothing. That is, entrepreneurship is the process of creating
or seizing an opportunity and pursuing it regardless of the resources
currently controlled. (textbook)
Venkataraman (1997) Entrepreneurship research seeks to understand how opportunities to
bring into existence future goods and services are discovered, created,
and exploited, by whom, and with what consequences.
The concept of entrepreneurship as an organized knowledge came into being about hundred years ago.
Though the economists from Adam Smith to Marshall were talking about it but without assigning the
name of entrepreneurship. They used the terms as employer, the master, the merchant and the
undertaker for carrying out different entrepreneurial activities now comprising of entrepreneurship. It
was eantillon, who first brought out the term entrepreneur (Murthy 1989) and entrepreneurship was
recognized in economic literature.
Considerable attention has focused on the definition of the term “entrepreneur”. Schumpeter(1959)
considered the entrepreneur as an innovator. He writes that Entrepreneurship is the “carrying out of
new combination we call enterprise”; the individuals whose function is to carry them out we call
entrepreneurs.
The new combination focuses on five aspects (Schumpeter 1934): The introduction of new goals, new
methods of production, opening up of new markets, new sources of supply of raw material and new
industrial organizations. Say (1964) uses the term entrepreneur to refer to someone who creates and
then, perhaps, operates a new business firm, whether or not there is anything innovative in those acts.

9. Baumol (1993) sees the “Schumpeter” type as an innovating entrepreneur and the “Say” type as the
firm-organizing entrepreneur. People who get ideas for creating a new business, bring that business into
existence and then carry on the work of the enterprise, are entrepreneurs (Jena 1989). Pprecisely, an
entrepreneur is one who undertakes to organize, manage, and assume the risks of a business. Even a
small business unit is an entrepreneur and his activities are the entrepreneurhip.
Entrepreneurship is a human activity which plays a major role in economic development its history is as
old as human history it indicates to the spirit of enterprise. Such a spirit transform the man “from a
nomad to a cattle rarer, to a settled agriculturist, to a trader and an industrialist” (Murthy 1989).
An entrepreneur is a person while entrepreneurship is the process of its actual working.
Entrepreneurship is also consistently equated with the establishment and management of small
business enterprises. In United States, the entrepreneur is often defined as one who starts his own, new
and small business. (Drucker 1985).
Modern literature on economic development classifies the entrepreneurship in four broad categories.
The innovating, The imitating, The Fabian and The drone entrepreneurship (Williamson and Bultrick
1969). Innovating and imitating entrepreneurship is generally available in developed countries and very
rare and limited in developing countries. Developing countries have in them the Fabian and Drone types
of entrepreneurship.
In all the above definitions, entrepreneurship refers to the functions performed by a entrepreneur is
establishing an enterprise. Just as management is regarded as what mangers do, entrepreneurship may
be regarded as what entrepreneurs do. In other words, entrepreneurship is a process involving various
actions to be undertaken to establish an enterprise. It is, thus, process of giving birth of a new
enterprise.

10. Entrepreneurship = Entrepreneur + Enterprise
(Process) (Person) (Object)
Theories of Entrepreneurship
An entrepreneur, as described by the Small Business Association, puts together a business and
accepts the associated risk to make a profit. While this definition serves as a simple but accurate
description of entrepreneurs, it fails to explain the phenomena of entrepreneurship itself. A
number of theories exist, but all of them fall into one of five main categories
Economic Theories
Economic entrepreneurship theories date back to the first half of the 1700s with the work of Richard
Cantillon, who introduced the idea of entrepreneurs as risk takers. The classic, neoclassical and Austrian
Market process schools of thought all pose explanations for entrepreneurship that focus, for the most
part, on economic conditions and the opportunities they create. Economic theories of entrepreneurship
tend to receive significant criticism for failing to recognize the dynamic, open nature of market systems,
ignoring the unique nature of entrepreneurial activity and downplaying the diverse contexts in which
entrepreneurship occurs.
Resource-Based Theories
Resource-based theories focus on the way individuals leverage different types of resources to get
entrepreneurial efforts off the ground. Access to capital improves the chances of getting a new venture
off the ground, but entrepreneurs often start ventures with little ready capital. Other types of resources
entrepreneurs might leverage include social networks and the information they provide, as well as
human resources, such as education. In some cases, the intangible elements of leadership the
entrepreneur adds to the mix operate as resource that a business cannot replace.

11. Psychological Theories
Psychological theories of entrepreneurship focus on the individual and the mental or emotional
elements that drive entrepreneurial individuals. A theory put forward by psychologist David McCLelland,
a Harvard emeritus professor, offers that entrepreneurs possess a need for achievement that drives
their activity. Julian Rotter, professor emeritus at the University of Connecticut, put forward a locus of
control theory. Rotter’s theory holds that people with a strong internal locus of control believe their
actions can influence the external world and research suggests most entrepreneurs possess trait. A final
approach, though unsupported by research, suggests personality traits ranging from creativity and
resilience to optimism drive entrepreneurial behavior.
Sociological/Anthropological Theories
The sociological theory centers its explanation for entrepreneurship on the various social contexts that
enable the opportunities entrepreneurs leverage. Paul D. Reynolds, a George Washington University
research professor, singles out four such contexts: social networks, a desire for a meaningful life, ethnic
identification and social-political environment factors. The anthropological model approaches the
question of entrepreneurship by placing it within the context of culture and examining how cultural
forces, such as social attitudes, shape both the perception of entrepreneurship and the behaviors of
entrepreneurs.
Opportunity-Based Theory
Prolific business management author, professor and corporate consultant, Peter Drucker put forward an
opportunity-based theory. Ducker contends that entrepreneurs excel at seeing and taking advantage of
possibilities created by social, technological and cultural changes. For example, where a business that
caters to senior citizens might view a sudden influx of younger residents to a neighborhood as a
potential death stroke, an entrepreneur might see it as a chance to open a new club.
Importance of Entrepreneurship
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 input in the
economic development of a country.
The nature of a developing economy is quite different from a developed economy. The
developing economy can be an agricultural country moving towards the industrialization or it
may be the one where in the industry may be in its infancy lacking advance technology.

12. The modern era is an era of changes. The whole world is becoming a village due to the industrial
revolution and fast developing communication technology. The globalization of industry and
commerce is bringing a vast change in various aspects of life.
Economic development of a country is the outcome of purposeful human activity. The modern
era is an era of changes. The whole world is becoming a village due to the industrial revolution
and fast developing communication technology. The globalization of industry and commerce is
bringing a vast change in various aspects of life.
Economic development of a country is the outcome of purposeful human activity. Economic
development is a highly dynamic process characterized by the pattern of demand shifts, new
products are needed, appear for the production of goods within a country.
A developing country needs entrepreneurs who are competent to perceive new opportunities and
are willing to incur the necessary risk in exploiting them. A developing economy is required to
be brought out of the vicious circle of low income and poverty. Entrepreneur can break this
vicious circle. Entrepreneurs and helping government can change a developing economy in
developed economy.
Employment Generation
Entrepreneurs not only give employment to the entrepreneur but also a source of direct and
indirect employment for many people in a country. Unemployment is a chronic problem in most
of the developing and underdeveloped countries. Entrepreneurs play an effective role in reducing
the problem of unemployment in the country which in turn clears the path towards economic
development of the nation
Entrepreneurial development is looked at as a vehicle for employment generation through
promotion of small business. India, being far more developed and forward looking country than
some of the third world countries, can provide lead to entrepreneurial development activities.
However, India can benefit from the well- documented success experiences of developed
countries like USA, Japan and UK in the field of employment generation and small business
promotion.
Promotes Capital Formation

13. Entrepreneurs mobilize the idle funds which lead to capital formation. The funds which are used
by entrepreneurs is a mix of their own and borrowed. This leads to creation of wealth which is
very essential for development of an economy.
Small Business Plan Dynamism
Great dynamism is one of the qualities of the small and medium enterprises. This quality of
dynamism originates in the inherent nature of the small business. The structure of small and
medium enterprises is less complex than that of large enterprises and therefore facilitates quicker
and smoother communication and decision- making. This allows for the greater flexibility and
mobility of small business management. Also, small enterprises, more often make it possible for
owners, who have a stronger entrepreneurial spirit than employed mangers, to undertake risk and
challenges.
Balanced Economic Development
Small business promotion needs relatively low investment and therefore can be easily undertaken
in rural and semi-urban areas. This in turn creates additional employment in these areas and
prevents migration of people from rural to urban areas. Since majority of the people are living in
the rural areas, therefore, more of our development efforts should be directed towards this sector.
Small enterprises use local resources and are best suited to rural and underdeveloped sector
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.
Innovations in Enterprises
Business enterprises need to be innovative for survival and better performance. It is believed that
smaller firms have a relatively higher necessity and capability to innovate. The smaller firms do
not face the constraints imposed by large investment in existing technology. Thus they are both
free and compelled to innovate.
Entrepreneurship development is accelerating the pace of small firm’s growth in India. An
increased number of small firms are expected to result in more innovations and make the Indian
industry compete in the international market.

14. Better standards of living
Entrepreneurs play a vital role in achieving a higher rate of economic growth. Entrepreneurs are
able to produce goods at lower cost and supply quality goods at lower price to the community
according to their requirements. When the price of the commodes decreases the consumers get
the power to buy more goods for their satisfaction. In this way they can increase the standard of
living of the people.
Self-Reliance
Entrepreneurs are the corner stores of national self-reliance. They help to manufacture
indigenous substitutes to imported products which reduce the dependence on foreign countries.
There is also a possibility of exporting goods and services to earn foreign exchange for the
country. Hence, the import substitution and export promotion ensure economic independence
and the country becomes self-reliance.
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
Entrepreneurship also facilitates the rate of development of a country by significantly
contributing to the following factors.
• By increasing the rate of growth in GDP of a country
• Increasing productivity.
• Growing employment opportunity.
• Increasing economic diversification.
• Optimum use of local resources
• Continued innovation in techno – managerial practices
• Improving in international competitiveness.

15. Entrepreneurs vs. Managers: What’s the big difference?
1. The Job of an Entrepreneur Begins Before Even the Business is Created
An entrepreneur will perceive an opportunity, assemble a team, locate resources for his new
business idea, raise the needed capital and start the business while the manager comes in only
after the foundation has been laid and the business established. What this mean in essence is
that the job of a manager begins only after the entrepreneur has done the ground work.
Without entrepreneurs, the managers will have no business to manage.
2. Entrepreneurs are more concerned with the launching and sustainability of a business in
the face of uncertainty while managers are more concerned with the effective and efficient
operation of an on-going business.
3. Managers are specialists; business management specialist to be precise. They are focused
on managing and growing a business. On the other hand, entrepreneurs are generalist. They
need to know a little about everything. An entrepreneur must know a little about product
development and design, business law, accounting, communication and public speaking,
investing, leadership, business systems, finance and insurance, marketing and sales, raising
capital and so on. An entrepreneur’s cup must never be full.
4. Entrepreneurs are street smarts; they learn by trial and error, they learn from their own
mistakes and the business mistakes of others. An entrepreneur starts with whatever is on
ground and learns the hard way.
5. Financial freedom is the utmost priority of entrepreneurs. Freedom to do what they want,
freedom to live the kind of life they love and freedom to make a choice. To managers,
security is the utmost priority. Security comes in the form of a steady paycheck, pension,
gratuity, pay raises, job titles, promotions, bonuses and entitlements.
6. An entrepreneur owns the business; a manager is simply an employee that works in the
entrepreneur’s business. In essence, a manager owns a job. A manager is paid to run the
entrepreneur’s business.
7. The reward of entrepreneurs come in the form of capital gains, asset acquisition, cash
flow, and dividend while the managers reward come in form of salaries, pay offs, promotion,
job title, bonus and incentives.
8. Entrepreneurs thrive on risk and uncertainty. To entrepreneurs, risk and uncertainty are
part of the game of entrepreneurship; risk is what makes the game exciting. Managers on the
other hand are conservative and detest risk; they simply avoid it.
9. Entrepreneurs see mistakes as an avenue to learn something; they learn more from their
business mistakes. Managers avoid mistakes because it will cost them their job. Besides; that

16. is why they are being paid; to avoid mistakes. That is where the word “professionalism”
comes in.
10. When entrepreneurs come together to pool resources or network, they form a team but
when managers who are usually employees come together to work towards a common goal,
they form a union.
11. Entrepreneurs are primarily motivated by the need to build a business that solves a
problem or provide a need, while providing them cash flow and freedom. Managers on the
other hand are motivated by the next paycheck, bonus, incentive, pay off, job title and
promotion.
12. Entrepreneurs are committed to the business from its inception till they achieve their
goal. Managers on the other hand are committed till the next paycheck; delay or cut their
paycheck and they are gone
Difference between an Entrepreneur and a Manager:
Bases of
Difference Entrepreneur Manager
1. Motive
The main motive of an entrepre-
neur 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 i.e., entrepreneur.
2. Status
An entrepreneur is the owner of
the enterprise.
A manager is the servant in the
enterprise owned by the
entrepreneur.
3. Risk Bearing
An 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. Rewards
The reward an entrepreneur gets
for bearing risks involved in the
enterprise is profit which is highly
uncertain.
A manager gets salary as reward
for the services rendered by him
in the enterprise. Salary of a
manager is certain and fixed.
5. Innovation Entrepreneur himself thinks over
what and how to produce goods
to meet the changing demands
But, what a manager does is
simply to execute the plans
prepared by the entrepreneur.

17. of the customers. Hence, he acts
as an innovator also called a
‘change agent’
Thus, a manager simply
translates the entrepreneur’s
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.
An manager needs to possess
qualities and qualifications like
low achievement motive, origi-
nality in thinking, foresight, risk
-bearing ability and so on.
Role of Entrepreneur in economic development
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 input 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
is discussed in a systematic and orderly manner as follows.
(1) Promotes Capital Formation:
Entrepreneurs promote capital formation by mobilising the idle savings of public. They employ
their own as well as borrowed resources for setting up their enterprises. Such type of
entrepreneurial activities lead to value addition and creation of wealth, which is very essential for
the industrial and economic development of the country.
(2) Creates Large-Scale Employment Opportunities:
Entrepreneurs provide immediate large-scale employment to the unemployed which is a chronic
problem of underdeveloped nations. With the setting up.of more and more units by
entrepreneurs, both on small and large-scale numerous job opportunities are created for others.
As time passes, these enterprises grow, providing direct and indirect employment opportunities
to many more. In this way, entrepreneurs play an effective role in reducing the problem of
unemployment in the country which in turn clears the path towards economic development of the
nation.
(3) 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

18. up of more industries lead to more development of backward regions and thereby promotes
balanced regional development.
(4) Reduces Concentration of Economic Power:
Economic power is the natural outcome of industrial and business activity. Industrial
development 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.
(5) Wealth Creation and Distribution:
It stimulates equitable redistribution of wealth and income in the interest of the country to more
people and geographic areas, thus giving benefit to larger sections of the society. Entrepreneurial
activities also generate more activities and give a multiplier effect in the economy.
(6) Increasing Gross National Product and Per Capita Income:
Entrepreneurs are always on the look out for opportunities. They explore and exploit
opportunities,, encourage effective resource mobilisation of capital and skill, bring in new
products and services and develops markets for growth of the economy. In this way, they help
increasing gross national product as well as per capita income of the people in a country.
Increase in gross national product and per capita income of the people in a country, is a sign of
economic growth.
(6) Improvement in the Standard of Living:
Increase in the standard of living of the people is a characteristic feature of economic
development of the country. Entrepreneurs play a key role in increasing the standard of living of
the people by adopting latest innovations in the production of wide variety of goods and services
in large scale that too at a lower cost. This enables the people to avail better quality goods at
lower prices which results in the improvement of their standard of living.
(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.
(8) Induces Backward and Forward Linkages:
Entrepreneurs like to work in an environment of change and try to maximize profits by
innovation. When an enterprise is established in accordance with the changing technology, it
induces backward and forward linkages which stimulate the process of economic development in
the country.

19. (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.
Evaluation of Entrepreneurship
Relationships. Having existing relationships with necessary customers, partners, hires,
investors, etc. can be save a lot of time, reduce costs, and reduce risk. Without existing
relationships the team will have to form them, which takes time and there is risk in being
able to form them at all. For example, if you don’t know how to code, and you’ll need a
technical co-founder for the business, and you don’t know any, that’s one more roadblock to
getting your business off the ground. Which doesn’t mean you shouldn’t do it, it’s just
important to consider how many roadblocks you’re going to have before you go down the
path.
Access to customers. If I can’t get enough customer development interviews within a
reasonable period of time, then it will be that much harder and take that much longer to get
started. Conversely, if I have existing relationships with, or at least easy access to, customers
I can get feedback on my product much easier. When the time is right, sales and marketing
will also be that much easier, shorter, and cheaper with existing access to customers. For
example, if Tim Ferriss wanted to launch a productivity related product, he would have an
advantage because of all of his existing relevant blog traffic and subscribers. I’ve seen access
to customers be especially important to enterprise products. Having relationships with
decisions makers helps with customer development and sales.

20. Passion. Starting a company is hard and time consuming. If I’m solving a problem I’m
passionate about and/or serving a customer segment I enjoy spending time with, my overall
quality of life will be higher, and I believe I will be more successful. In starting a company,
you inevitably have to ask a lot of people for help. For example, big things like introductions
to key people, or for small things like to share your site with their friends. I want to be in a
business that I’m proud of and passionate about so I’m motivated to hustle. Many businesses
require spending a lot of time with customers, so I’ll want to enjoy that time. Lifestyle is an
important factor to me.
Skill set required. If the skill set required to execute the business plays to the strength of the
team, execution risk should be less. For example, distribution: I wouldn’t want to start a
business with a sales distribution strategy if I didn’t know sales. Conversely, if it’s a
consumer app that acquires customer through search, a team of SEO experts could be pretty
effective. If I’m trying to solve a hard technical problem, I would want to make sure I have
incredible technical talent on board. I would be more confident in an entrepreneur that’s
started one or more ventures previously, or at least has experience in the skill sets required to
start and run the business. As an entrepreneur, I’d want to start a business that requires skills
that I have. Of course you can learn, but that becomes one extra cost, time constraint, and
risk.
Ability to validate. How confident can I be, or quickly get, that I’m pursuing a viable
business? If I can’t get 10 customer development interviews within a week, and begin to
prove there’s a viable business within a few months, I don’t want to do it. I know that
massively limits my upside, but again, my goals are specific.
Need for financing/ability to generate cash flow. If a lot of money is required to start
testing the concept, either because costs are high or because it will take a while to become
cash flow positive, financing will be required either from founders or investors. If you don’t
have any existing relationships to investors, or at least close connections, that’s, another time

21. suck and risk factor. It’s certainly surmountable though if you’re good. Raising money, while
glorified in the media, does have downsides. For example, you can lose some control over
your business and you have to give up equity (and therefore upside). The more cash you need
at the start, when your valuation is the lowest, the more equity you will have to give up.
Diversified. I never want to have all my eggs in one basket. I don’t want my life to be
dependent on one customer or employer. I don’t want one trend, industry, or customer group
to effect everything I’m doing. It’s easy for investors to diversify. For entrepreneurs it’s a bit
harder, but possible. I personally don’t have a very wide portfolio now, but I plan to.
Size of market/opportunity. How much upside is there? If your goal is to build a massive
company, you will need to be in a massive market. This item will largely depend on personal
goals.
Quantity and quality of work. How enjoyable will the work be? How much time will it
require? Most opportunities will require significant time investments. Overall lifestyle is an
important factor to me, so I wouldn’t want to spend 100 hours a week doing something I
hate. This factor should likely be considered as a ratio to potential upside (see above). For
example, I would trade 24 hours of awfulness for $1M, but I wouldn’t trade 5 years of
awfulness.
Conclusion
A lot of entrepreneurial content encourages persistence, hard work etc. “If you put your mind
to it you can do whatever you want.” The reality is there are many challenges from starting to
growing, and different factors that can make an opportunity more or less likely to succeed.

22. This is a list of notable Indian entrepreneurs.
Name Associated Company
Sridhar Vembu Zoho Corporation
Verghese Kurien Amul
Kunwer Sachdev Su-kam Power Systems
Bhargav Sri Prakash FriendsLearn
Azim Premji Wipro
Lakshmi Mittal ArcelorMittal
Dhirubhai Ambani Reliance Industries
Anand Mahindra Mahindra and Mahindra
Shamit Khemka SynapseIndia
Saji Chameli Orell
Sachin Bansal and Binny Bansal Flipkart
Grandhi Mallikarjuna Rao GMR Group

23. Name Associated Company
Gunupati Venkata Krishna Reddy GVK Group
G. R. Gopinath Air Deccan
N. R. Narayana Murthy Infosys
Shiv Nadar HCL Technologies
V. G. Siddhartha Café Coffee Day
Krishan Dhir DHITECH Consultancy Services
Kiran Mazumdar-Shaw Biocon
Achyuta Samanta KIIT Group of Institutions
Gautam Thapar Avantha Group
Sunil Mittal Bharti Enterprises
Shekhar Chatterjee Host Dude Solutions
Venugopal Dhoot Videocon
Karsanbhai Patel Nirma

24. Name Associated Company
Vishal Gondal Indiagames
Chirag Kulkarni Insightfully
Trishneet Arora TAC Security Solutions
Ardeshir Godrej, Pirojsha Godrej, Adi
Godrej
Godrej Group
Kallam Anji Reddy Dr. Reddy's Laboratories
Mangal Prabhat Lodha Lodha Group
Jamnalal Bajaj, Rahul Bajaj Bajaj Group
Prathap C. Reddy Apollo Hospitals
Ajay Piramal, Swati Piramal Piramal Enterprises Ltd
Kalanithi Maran Sun Group
Prannoy Roy NDTV
Anil Agarwal Vedanta Resources
Subrata Roy Sahara India Pariwar

25. Name Associated Company
Shashi & Ravi Ruia Essar Group
Jagdish Chandra Mahindra Mahindra Group
Naveen Jain Moon Express
Brijmohan Lall Munjal Hero Group
Jamsetji Tata Tata Group
Walchand Hirachand Walchand group
Khwaja Abdul Hamied Cipla
Kochuousep Chittilapilly V-Guard Industries Ltd
Kishore Biyani Future Group
Naveen Tewari InMobi
Laxmanrao Kirloskar Kirloskar Group
Baba Kalyani Bharat Forge
Anand Deshpande Persistent Systems

26. Name Associated Company
Byrraju Ramialinga Raju Mahindra Satyam
Dilip Sanghvi Sun Pharmaceutical
Ekta Kapoor Balaji Telefilms
Dr. G. Surender Rao Yashoda Hospitals
Ramoji Rao Ramoji Group
Kumar Mangalam Birla Aditya Birla Group
Varun Agarwal Alma Mater Store
Ujwal Makhija Phonon Communications
Ashok Soota Happiest Minds Technologies
Ritesh Agarwal OYO Rooms