entrepreneur - DOC by 4bnW938




           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
         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
         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.
       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
        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.

                     Fig:1   Basics of an Entrepreneur

        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”.
Characteristics of an entrepreneur:
        A successful entrepreneur must be a person with technical
competence, initiative, good judgement, 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 situation under which decision have to be
Clear objectives: An entrepreneur should have a clear objectives as to the
exact nature of the goods to be produced and subsidiary activitie 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
                      Fig: 2 Characteristics of an Entrepreneur

                         TECHNICAL                       ORGANISATION

                        KNOWLEDGE                            SKILL

          EFFECTIVE                                                       INTELLIGENCE

 PUBLIC RELATIONS                     ENTREPRENEUR                               CREATIVITY

          EMOTIONAL                                                       INNOVATION

                          SOUND                         CLEAR OBJECTIVE
                                     BUSINESS SECRECY

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:
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
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
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.
            The entrepreneur have been broadly classified according to the
types of business, use of professional skill, motivation, growth and stages of
development are discussed below

A.   Entrepreneur according to the type of business:



                                               TRADING ENTREPRENEUR

                                              INDUSTRIAL ENTRPRENEUR

                                              CORPORATE ENTREPRENEUR

                                             AGRICULTURAL ENTREPRENEUR

                                                RETAIL ENTREPRENEUR

                                               SERVICE ENTREPRENEUR

Business entrepreneur: Business entrepreneurs are individuals who conceive
an idea for a new product or service and then create a business to materialize
their idea into reality.
Trading entrepreneur: Trading entrepreneur is one who undertakes trading
activities and is not concerned with the manufacturing work.
Industrial entrepreneur: Industrial entrepreneur is essentially a manufacturer
who identifies the potential needs of customers and tailors a product or
service to meet the marketing needs.
Corporate      entrepreneur:         Corporate        entrepreneur       is   a   person   who
demonstrates his innovative skill in organizing and managing corporate
Agricultural entrepreneur: Agricultural entrepreneurs are those entrepreneurs
who undertake agricultural activities as raising and marketing of crops,
fertilizers and other inputs of agriculture.
B.Entrepreneur in technology:


                                    TECHNICAL ENTREPRENEUR

                                  NON TECHNICAL ENTRPRENEUR

                                  PROFESSIONAL ENTREPRENEUR

                                    HIGH TECH ENTREPRENEUR

                                    LOW TECH ENTREPRENEUR

Technical entrepreneur: A technical entrepreneur is essentially compared to a
“craftman”.He concentrates more on production than on marketing. He
demonstrates his innovative capabilities in matter of production of goods and
rendering of services.
Non- technical entrepreneur: Non- technical entrepreneurs are those who are
not concerned with the technical aspects of the product in which they deal.
They are concerned only with developing alternative marketing and
distribution strategies to promote their business.
Professional entrepreneur; Professional entrepreneur is a person who is
interested is establishing a business but does not have interest in managing
or operating it once it is established. Such an entrepreneur is dynamic and he
conceive new ideas to develop alternative projects.
C.Entrepreneur and Motivation:


                                    PURE ENTREPRENEUR

                                   INDUCED ENTREPRENEUR

                                  MOTIVATED ENTREPRENEUR

                                 SPONTANEOUS ENTREPRENEUR

Pure Entrepreneur: A pure entrepreneur is an individual who is motivated by
psychological and economic rewards.
Induced entrepreneur: Induced entrepreneur is one who is induced to take up
an entrepreneurial task due to the policy measures of the government that
provides assistance, incentives, concessions and necessary overhead
facilities to start a venture.
Motivated entrepreneur: New entrepreneurs are motivated by the desire for
self fulfillment.
Spontaneous entrepreneur: These entrepreneurs start their business by their
natural talents.
D.Growth and entrepreneur:

                           ACCORDING TO THE GROWTH

                                                    GROWTH ENTREPRENEUR

                                                 SUPER GROWTH ENTREPRENEUR
Growth entrepreneur: Growth entrepreneurs are those who necessarily take
up a high growth industry which has substantial growth prospects.
Super growth entrepreneur: Super growth entrepreneurs are those who have
shown enormous growth of performance in their venture.

E.Entrepreneur and stages of development


                       FIRST GENERATION

                    MODERN ENTREPRENEUR


First generation entrepreneur: A first generation entrepreneur is one who
starts an industrial unit by innovative skill.He is essentially an innovator,
combining different technologies to produce a marketable product or service.
Classical entrepreneur: A classical entrepreneur is one who is concerned with
the customer and marketing needs through the development of a self
supporting venture.
                 Entrepreneurial development is a process in which persons
are injected with motivational drives of achievement and in sight to tackle
uncertain and risky situations especially in business undertakings. The
process of entrepreneurial development focuses on training, education,
reorientation and creation of conducive and healthy environment for the
growth of enterprises.
Meaning: EDP is an effective human resource development tool. It designed
to help a person in strengthening and fulfilling his entrepreneurial motive and
in acquiring skills and capabilities necessary for playing his entrepreneurial
role effectively.
Objectives of the Programme:
            In line with the national programme for the       promotion and
development of small and medium industries in the countryside, the Industrial
Service Institute (ISI) under the Department of Industrial Promotion (DIP)
launched the EDP to give substance to the government’s policies of
stimulation of economicgrowth, dispersing industries to rural areas and
promoting the processing of local raw materials. The EDP was considered a
part of the industrial development policy which was articulated in the Five
Year National Economic and Social Development Plan.
         The Programme had sought to develop entrepreneurial activities in
the rural areas of Thailand as a vehicle for economic growth with the
achievement of the following objectives:
   1. To promote the development of small and medium enterprises that
       would encourage self - employment among potential entrepreneurs.
   2. To provide, in the rural areas, special programmes designed to
       stimulate new ventures and encourage expansion of existing activities
       of small and medium industries.
   3. To generate employment and self employment opportunities in the
       processing of indigenous raw materials for local consumption and
   4. To develop entrepreneurial opportunities for potential entrepreneurs
       and upgrade managerial skills for existing entrepreneurs.
For a sound training programme for entrepreneurship development in India ,
the expert group constituted by the NIESBUD accepted that it must be able to
help selected entrepreneurs to:
   1. Develop and strengthen their entrepreneurial quality / motivation.
   2. Analyse environment related to small industry and small business.
   3. Select project / product.
   4. Formulate projects.
   5. Understand the process and procedure of setting up of small
   6. Know and influence the source of help / support needed for launching
      the enterprise
   7. Acquire the basic management skills
   8. Know the pros and cons of being an entrepreneur and
   9. Acquaint and appreciate the needed social responsibility /
      entrepreneurial disciplines.
Some of the other important objectives of entrepreneurial training are:
   1. To let the entrepreneur set or reset the objectives of his business and
      work individually and along with his group for their realization.
   2. To prepare him for accepting totally unforeseen risks of business after
      such training.
   3. To enable him to take strategic decisions
   4. To enable him to build an integrated team to fulfill the demands of
   5. To communicate fast, clearly and effectively
   6. To develop a broad vision to see the business as a whole and to
      integrate his function with it
   7. To enable him to relate his product and industry to the total
      environment, to find what is significant in it and to take it into account in
      his decisions and actions.
   8. To enable him to cope with and co ordinate all relevant paper work,
      most of which is statutorily obligatory.
   9. To make him accept industrial democracy that is accepting workers as
      partners in enterprise and
   10. To strengthen his integrity, honesty and compliance with law the key to
      success in the long run.
                  Entrepreneurial Development Cycle

1.Entrepreneurial education
2.Planned publicity for entrepreneurial opportunities
3. Identification of potential entrepreneurs through scientific method
4. Motivational training to new entrepreneurs
5. Help and guidance in selecting products and preparing project reports.
6.Making available techno economic information and product profits
7.Evolving locally suitablenew products and processes
8.Availability of local agencies with trained personnel for entrepreneurial counseling and
9.Recognition of entrepreneurial skills
                                                                1.    Registration of unit
                                                                2.    Arranging finance
                                                                3.    Providing land, shed, power, water etc
simulatory                            support                   4.    Guidance for selecting and obtaining machinery
                                                                5.    Supply of scarce raw materials
                                                                6.    Getting licences / import licences
                                                                7.    Providing common facilities
                                                                8.    Granting tax relief or other subsidy
                                                                9.    Offering management consultancy
             sustaining                                         10. Help marketing product
                                                                11. Providing information.

                i.     Help modernization
                ii.    Help diversification / expansion / substitute production
                iii.   Additional financing for full capacity utilization
               iv.     Deferring repayment / interest
                v.     Diagnostic industrial extension / consultancy source
               vi.     Production units legislation / policy change
               vii.    Product reservation / creating new avenues for marketing
              viii.    Quality testing and improving service
               ix.     Need based common facility centre

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