Basic definitions• Entrepreneur – Person who creates anenterprise. Derived from the French word –enterprendre (to undertake)– Earliest entrepreneurship theory by RichardCantillon• Entrepreneurship – Process of action takenby an entrepreneur to establish theenterprise
Advantages of being an entrepreneur• Own boss• Put your ideas into practice• Money for yourself• Learn to run a business• Work with your customers• Personal satisfaction• Work in an area that you enjoy• Build retirement value
Advantages of being anentrepreneurManager• Salaried employee• Executes decisions• One of employees• Mostly fixed rewardsand salaryEntrepreneur• Own boss• Takes own decisions• Hires employees• Uncertain rewards
The entrepreneurial decision process• Entrepreneurial decision process –Deciding to become an entrepreneur byleaving present activity• Stages– Perceiving– Preparing business plan– Marshalling resources– Creating the enterprise– Consolidation and management
Characteristic of a successful entrepreneur• Creativity – Germination, Preparation, Incubation,Illumination, Verification• Innovation• Dynamism• Leadership• Teambuilding• Achievement motivation• Problem solving• Goal orientation• Risk taking and decision making ability• Commitment
Core competencies of entrepreneurs• Initiative• Perceiving opportunities• Persistence• Information gathering• Concern for quality• Commitment to contractualobligations• Efficiency orientation• Planning• Problem solving• Self-confidence• Expertise• Self-critical• Persuasion• Use of influence strategies• Assertiveness• Monitoring• Credibility• Concern for employeewelfare• Impersonal relationship• Expansion of capital base• Building product image
Skills Requiredof EntrepreneurTechnical BusinessManagementPersonalWriting Planning Inner ControlOral Communication Decision Making Risk TakingMonitoring TheEnvironmentHuman Relations InnovativeUse Technology Marketing(Selling)Change-OrientedVisionary
Classification of entrepreneurs• Based on functional characteristics• Based on developmental angle• Based on type of business• Based on personality type• Based on schools of thought
Classification of entrepreneurs• Based on functional characteristics– Innovative entrepreneur– Imitative or adoptive entrepreneur– Fabian entrepreneur– Drone entrepreneur• Based on developmental angle– Prime mover– Manager– Minor innovator– Satellite– Local trading
Classification of entrepreneurs• Based on type of business– Manufacturing– Wholesale– Retailing– Service• Based on personality type– Improver: Company as a means to improve the world.High integrity and ethics. Perfectionists.– Advisor: High level of assistance to customers and otherstakeholders.– Superstar: Charisma and energy of the CEO. Personalbrand– Artist: Reserved but highly creative person. Buildsbusiness around personal talents. Highly sensitive tofeedback
Classification of entrepreneurs• Visionary: Future vision and thoughts of thefounder. Formulation of plans to avoid problems.High focus on dreams• Analyst: Fixing problems in a systematic way.Excel in problem solving• Fireball: High levels of energy and optimism. Mayovercommit on teams• Hero: Tremendous will and ability to lead the world.Can assemble great companies. Overpromisingand using forceful tactics• Healer: Nurturing and harmony to the business.Inner calm. Wishful thinking.
Classification of entrepreneurs• Based on Schools of thought– Assessing personal qualities• ‘Great Person’• Psychological characteristics– Recognizing opportunities• Classical school– Acting and Managing• Management school– Leadership school– Reassessing and adopting• Intrapreneurship school
Myths about entrepreneurs• Entrepreneurs are born, not made• Entrepreneurs are academic and social misfits• Entrepreneurs fit an ideal profile• Money is what you need to become anentrepreneur• You need to be lucky• Great idea is sufficient• My best friend is my best business partner• Having no boss is fun• I’ll definitely become successful• Life will be simpler if I work for myself
Entrepreneurial development models• Psychological models• Sociological models• Integrated models
Entrepreneurial development models• Psychological models:– McClelland: Importance to achievement motives– Latent need for achievement among adults– Motivation-training programme to makeentrepreneurs willing and eager to exploit theopportunities provided– Creative Personality – status withdrawal (EverettHagen’s theory of social change)– John Kunkel – entrepreneurial supply as afunction of the surrounding social structure. Canbe influenced by manipulating economic andsocial incentives.
Entrepreneurial development models• Sociological models– Young’s theory: Change based upon Society’sincorporation of relative subgroups– Relativeness of a subgroup which has a lowstatus in a larger society will lead toentrepreneurial behaviour if the group has betterinstitutional resources than others in the societyat the same level.– Suggests the creation of supporting institutionsin society as the determinant ofentrepreneurship
Entrepreneurial development models• Integrated models– TV Rao – Entrepreneurial disposition• Need for motive• Long-term involvement either at thinking level oractivity level• Personal, social and material resources• Suitable socio-political system for establishment anddevelopment of enterprise
Principles forSuccessful New Venture1) Define Market2) Durable Products- 18Month Customer Payback3) Market Growth = 30-50%in 5 Years4) Patent Protection5) No Product SubstitutionsAvailable6) Products Variants7) No Strong CompetitionPresent8) Quick Market Dominance9) Gross Margin 30-50%10)Staged Financing11)ROI = 10X in 5 Years (25-30%/Year)12)Positive Cash Flow in 18Months13)Strong Management inIndustry
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