Enterpernurship

M.Azmat Awan (azmat.awan@gmail.com) MA Eco, MBA Banking & Finance, MS Islamic Banking & Finance
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ENTREPRENEURSHIP
Entrepreneurship for MBA-III University of the Punjab

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Entrepreneurship ( en·tre·pre·neur- ship): In Urdu ( ‫جوئی‬ ‫مہم‬ ‫۔‬ ‫)کارجوئی‬ in Arabic Riadat
al'Aemal ‫األعمال‬ ‫ريادة‬ & ‫األعمال‬ ‫رجل‬ & ‫:تجاري‬ The management guru Professor Peter F. Drucker
in his book “Innovation and Entrepreneurship” gives the basic details of Entrepreneurship as:
The word entrepreneur originates from the French word, “Entreprendre”, which means "to
undertake." In a business context, it means to start a business. The Merriam-Webster
Dictionary presents the definition of an entrepreneur as one who organizes, manages, and
assumes the risks of a business or enterprise.
So Entrepreneurship is defined as the capacity and willingness to develop, organize and
manage a business venture along with any of its risks in order to make a profit. The most
obvious example of entrepreneurship is the starting of new businesses. In economics,
entrepreneurship combined with land, labor, natural resources and capital can be
produce profit. Entrepreneurial spirit is characterized by innovation and risk-taking, and is an
essential part of a nation's ability to succeed in an ever changing and
increasingly competitive global marketplace.
The concept of entrepreneurship has a wide range of meanings. On the one extreme an
entrepreneur is a person of very high aptitude who pioneers change, possessing
characteristics found in only a very small fraction of the population. On the other extreme of
definitions, anyone who wants to work for him/her self is considered to be an entrepreneur.
Entrepreneurship is the makeup of an entrepreneur as follows:

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Personality: in terms of possessing resilience, tenacity, opportunity spotting, and risk taking.
Attitude: having awareness of the importance of customer focus, the application of
creativity and imagination, defined personal standards and values, the perception of
enterprise as a positive activity.
Skills: such as the ability to network, to think strategically, to gain access to resources,
business knowledge and acumen, interpersonal skills and people management capabilities.
Motivation: personal drive and ambition, the desire to make an impact, the need for
achievement or self-satisfaction, a desire for status, to create and accumulate wealth, and
social responsibility.
Schumpeter's View of Entrepreneurship: Austrian economist Joseph Schumpeter's
definition of entrepreneurship placed an emphasis on innovation, such as:
 new products
 new production methods
 new markets
 new forms of organization
Wealth is created when such innovation results in new demand. From this viewpoint, one can
define the function of the entrepreneur as one of combining various input factors in an
innovative manner to generate value to the customer with the hope that this value will exceed
the cost of the input factors, thus generating superior returns that result in the creation of
wealth.
Entrepreneurship vs. Small Business: Many people use the terms "entrepreneur" and
"small business owner" synonymously. While they may have much in common, there
are significant differences between the entrepreneurial venture and the small business.
Entrepreneurial ventures differ from small businesses in these ways:
1. Amount of wealth creation - rather than simply generating an income stream that
replaces traditional employment, a successful entrepreneurial venture creates
substantial wealth, typically in excess of several million dollars of profit.
2. Speed of wealth creation - while a successful small business can generate several
million dollars of profit over a lifetime, entrepreneurial wealth creation often is rapid;
for example, within 5 years.
3. Risk - the risk of an entrepreneurial venture must be high; otherwise, with the
incentive of sure profits many entrepreneurs would be pursuing the idea and the
opportunity no longer would exist.
4. Innovation - entrepreneurship often involves substantial innovation beyond what a
small business might exhibit. This innovation gives the venture the competitive
advantage that results in wealth creation. The innovation may be in the product or
service itself, or in the business processes used to deliver it.
So the Entrepreneurship in today era is defined as: “Entrepreneurships is the process of
creating something new with value by devoting the necessary time and effort, assuming the

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accompanying financial, psychic and social risks, and receiving the resulting rewards of
monetary and personal satisfaction and independence.”
THEORIES OF ENTREPRENEURSHIP: Entrepreneurship is an evolved thing. With the
advancement of science and technology it has undergone metamorphosis change and
emerged as a critical input for socio-economic development. Various writers have developed
various theories on entrepreneurship and popularized the concept among the common
people. The theories propounded by them can be categorized as under-
Sociological Theory:
•- Entrepreneurship is likely to get a boost in a particular social culture
•- Society’s values, religious beliefs, customs, taboos influence the behaviour of individuals
in a society
•- The entrepreneur is a role performer according to the role expectations by the society
Psychological Theory:
•- Entrepreneurship gets a boost when society has sufficient supply of individuals with
necessary psychological characteristics
•- The psychological characteristics include need for high achievement, a vision or foresight,
ability to face opposition
•- These characteristics are formed during the individual’s upbringing which stress on
standards of excellence, self reliance and low father dominance
Entrepreneurship Innovation theory:
•- Theory by Joseph Schumpeter who believes that entrepreneur helps the process of
development in an economy
•- He says that an entrepreneur is the one who is innovative, creative and has a foresight
•- According to him, innovation occurs when the entrepreneur
–Introduces anew product
–Introduces anew production method
–Opens up a new market
–Finds outanew sourceofraw material supply
–Introduces new organization inany industry
•- The theory emphasizes on innovation, ignoring the risk taking and organizing abilities of
an entrepreneur
•- Schumpeter’s entrepreneur is a large scale businessman, who is rarely found in developing
countries, where entrepreneurs are small scale businessmen who need to imitate rather than
innovate
Theory of High Achievement/Theory of Achievement Motivation:
•- McClelland identified 2 characteristics of entrepreneurship
–Doing things in a new and better way
–Decision making under uncertainty

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•- He stressed that people with high achievement orientation (need to
succeed) were more likely to become entrepreneurs
•- Such people are not influenced by money or external incentives
•- They consider profit to be a measure of success and competency
MotivationtheorybyMcClelland(AcquiredNeedstheory):
•According to McClelland, a person has three types of needs at any given time, which are:
–Need for achievement (get success with one’s own efforts.)
–Need for power (to dominate, influence others)
–Need for affiliation (maintain friendly relations with others.)
•- The need for achievement is the highest for entrepreneurs
Theory of Religious Beliefs:
Max Weber has propounded the theory of religious belief. According to him,
entrepreneurism is a function of religious beliefs and impact of religion shapes the
entrepreneurial culture. He emphasized that entrepreneurial energies are exogenous supplied
by means of religious beliefs. the important elements of Weber’s theory are discussed
further-
1- Spirit of Capitalism: In the Webrian theory, spirit of capitalism is highlighted. We all
know that capitalism is an economic system in which economic freedom and private
enterprise are glorified, so also the entrepreneurial culture.
2- Adventurous Spirit: Weber also made a distinction between spirit of capitalism and
adventurous spirit. According to him, the former is influenced by the strict discipline
whereas the latter is affected by free force of impulse. Entrepreneurship culture is influenced
by both these factors.
3- Protestant ethic: According to Max Weber the spirit of capitalism can be grown only
when the mental attitude in the society is favorable to capitalism
4 -Inducement of profit: Weber introduced the new businessman into the picture of
tranquil routine. The spirit of capitalism intertwined with the motive of profit resulted in
creation of greater number of business enterprises.
Economic Theories: Entrepreneurship and economic development are interdependent.
Economic development takes place when a country' real rational income increases overall
period of time wherein the role of entrepreneurs is an integral part.
Thus, Peter F. Drucker has given his views that “an entrepreneur need not be a capitalist or
an owner. A banker who mobilizes other’s money and allocates it in areas of higher yield is
very much an entrepreneur though he is not the owner of the money.
HISTORIAL BAKGROUND OF ENTREPRENEURSHIP:
The history of Entrepreneurship led to a barter system that allowed people exchanged things
to satisfy their own requirements. This further led to the development of the market place
where people gathered to barter or sell their excess production in order to profit themselves.
This came about with the realization that they could not wait indefinitely for a coincidence of
wants before they could barter their own products. So Entrepreneurship first took off when

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production levels exceeded local consumption and people were left with surpluses of the
things they produced, whether in the form of agricultural produce, dairy products, livestock
and quite a few manufactured items.
However the history of Entrepreneurship is categorized as following:
 Earliest Period
 Middle Ages
 17th Century
 18th Century
 19th Century &
 20th Century
Earliest Period: Marco Polo, as a go-between was an Italian. He wants to trade routes to the
Far East. As a go-between, He had to sign a contract with a money person to sell his goods.
In the contract merchant-adventurer took a loan at 22.5% rate including insurance. Capitalist
was the passive risk bearer and merchant-adventurer took the active role in trading,
bearing all physical and emotional risks. When the merchant-adventurer successfully sold
the goods and completed the trip, the profits were divided with the capitalist taking most of
them (upto 75%), while the merchant-adventurer settled for the remaining 25%.
Middle Ages: Entrepreneur used to describe both as an actor and a person who managed
large production projects. Individuals did not take any risks because all the resources used to
provide by the government of the country, all an entrepreneur should do is to manage it. A
typical entrepreneur in the middle age was the priest. The person in charge of great
architectural works used to build castles and fortifications, public buildings, abbeys, and
cathedrals.
17th Century: The connection of the risk with entrepreneurship developed in the 17th century.
An entrepreneur was a person who entered into a contract with the government to perform a
service or to supply stipulated products. John law, a Frenchman was one of the entrepreneurs
in that period. The founder of the royal bank of France and the Mississippi Company, which
had an exclusive franchise to trade between France and the new world. Monopoly on French
trade eventually led to collapse of the company. Richard Cantillion, a well-known English
economist at the beginning of the 17th century, understood Law’s mistake. He viewed the
entrepreneur as a risk taker, observing those merchants, farmers, craftsmen, and others sole
proprietors “buy at a certain price and sell at an uncertain price, therefore operating at a
risk.”
18th Century: In the 18th century, the person with capital was differentiated from the one who
needed capital. The entrepreneur was distinguished from the capital provider. One reason for
this differentiation was the industrialization occurring throughout the world. Eli Whitney was
an American inventor best known for inventing the cotton gin. This was one of the key
inventions of the industrial Revolution. Thomas Edison, the inventor of many inventions. He
was developing new technologies and was unable to finance his inventions himself. Edison
was a capital user an entrepreneur, not a provider a venture capitalist.

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19th & 20th Centuries: In the late 19th and early 20th centuries, entrepreneurs were frequently
not distinguished from managers and were viewed mostly from an economic perspective.
The entrepreneur organizes and manages an enterprise for personal gain. The materials
consumed in the business, for the use of the land, for the services he employs, and for the
capital he requires. Andrew Carnegie is one of the best examples of this definition.
Carnegie, who descended from a poor scottish family, made the American Steel Industry one
of the wonders of the industrial world.
In the middle of the 20th Century: The function of the entrepreneurs is to recreate or
revolutionize the pattern of production by introducing an invention. Innovation, the act of
introducing some new ideas, is one of the most difficult tasks for the entrepreneur. Edward
Harriman, who reorganized the railroad in the United States. John Morgan, who developed
his large banking house by reorganizing and financing the nation’s industries. Traditional
technologies innovations translators, computers, lasers that are usually associated with the
word invention. The Egyptian who designed and built great pyramids out of stone blocks
weighing many tons each, to laser beams, supersonic planes and space stations.
Entrepreneurship in Muslim Era: Entrepreneurship is continuing to grow as an academic
discipline and career choice, continuous research to expand the knowledge conversation and
document the ongoing changes in the field are important for faculty, students and individuals
considering this field (Alstete, 2008). Studying this discipline may have been started now but
entrepreneurship is as old as the human is. In order to call something as Islamic it must be
derived from the basic sources; Quran and Sunnah. Same is the case of Islamic
Entrepreneurship that we need to look at the life of Prophet Muhammad himself and his
companions.
Most of the companions of Prophet Muhammad ‫ﷺ‬ were entrepreneurs and their financial
contribution to strengthen Islam has always been acknowledged and revered. In most of the
cases the reason stated for the companions of Holy Prophet ‫ﷺ‬ to adopt entrepreneurship was
the ease with which they could earn a livelihood without compromising on their religious
duties. Hazrat Abu Bakr1, Hazrat Usman Ghani2, Hazrat Talha and Hazrat Abdur Rehman
bin Aouf were traders of fabric. Hazrat Zubair and Umroo Bin Al Aas were involved in meat
processing. Hazrat Abu Bakr was the biggest businessman of Quraish3 and he used to have
hand loop factory near Madina. Hazrat Usman bin Affan, before Islam and afterwards, was a
famous business man, he used to trade cloth and dates.
An event from the great history of Islam leaves a strong impression on everyones mind. This
is regarding one of the companions of Prophet Muhammad ‫,ﷺ‬ Abdur Rehman bin Aouf, the
greatest entrepreneur and business man Muslim world has ever produced. When he arrived in
Madina after migrating from Makkah to escape wrath of enemies of Islam, he had nothing
1First Caliph of Islam and Companion of Prophet Muhammad ‫ﷺ‬ in his journey of migration from Makkah to Maina
2Third Caliph of Islamand Son in Law of Prophet Muhammad ‫ﷺ‬ for marryingtwo of his four daughters one by one.
3Tribe of Prophet Muhammad ‫ﷺ‬

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with him. People of Madina greeted their brethren of Islam with open arms and one Ansari4
companion of the Holy Prophet ‫,ﷺ‬ Saad bin Rabee offered half of all his possessions to
Abdur Rehman bin Aouf to help him make a new beginning. In response, Abdur Rehman
respectfully thanked his generosity and asked for the market place where he could find some
work. His self- esteem did not allow him to be a burden on his Ansari brother. So it is
obvious that the Islam is and remained a greatest advocate of initiating and performing
entrepreneurial activities as entrepreneurship is the life blood of an economy. In other words
Entrepreneurship is in fact a part of Islamic culture and Prophet Muhammad ‫ﷺ‬ (peace be
upon him,) and his companions are examples of this," there are a lot of Muslims that are
successful entrepreneurs in the world and Islam always invite all Muslims to be innovative,
entrepreneur and active. (Vargas-Hernández, Noruzi, & Sariolghalam, 2010)
TYPES OF ENTREPRENEURSHIP:
Government as an Innovator: One channel for commercializing the results of the synthesis
of social need and technology. That’s frequently called technology transfer. Relatively few
innovations reach commercial markets. Government and can easily manage business skills
necessary for successful commercialization.
Corporate Entrepreneurship: The concept of corporate entrepreneurship is generally
believed to refer to the development of new ideas and opportunities within large or
established businesses, directly leading to the improvement of organizational profitability
and an enhancement of competitive position or the strategic renewal of an existing business.
In the current era of hyper competition, strategic business units (SBUs) are emerging can be
considering the example.
Independent Entrepreneurship: Independent Intrapreneurship can also bridge the gap
between science and the marketplace. It is the practice of using entrepreneurial skills without
taking on the risks or accountability associated with entrepreneurial activities. It is practiced
by employees within an established organization using a systemized business model.
Employees, perhaps engaged in a special project within a larger firm are supposed to behave
as entrepreneurs, even though they have the resources and capabilities of the larger firm to
draw upon. So the main characteristics of an independent entrepreneur are the purpose of
making profit, the financial risks, the extent of the business activity and the generality
thereof, publicity, independence and risk of losing the invested capital.
Innovative Entrepreneurship: The definition of innovative entrepreneurship used here is not
synonymous with either small and medium-sized enterprises (SMEs) or business start-ups
but is derived from the intersection of three areas:
 Innovative businesses
 Young and high-growth businesses
 SMES
4 Believers who were already livingin Madinabeforearrival (migration fromMakkah) of Prophet and his Makki
Companions

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Imitative Entrepreneurs: Imitative Entrepreneurs adopt victorious innovations launched by
the innovative entrepreneurs. They duplicate the technology and techniques innovated by
others and they are suitable for underdeveloped countries.
Fabian Entrepreneurs: Fabian entrepreneurs are exemplified by great caution and
skepticism in experimenting any change in the organization. They imitate only in situations
where it becomes necessary to do so.
Drone Entrepreneurs: Drone Entrepreneurs suffer losses, as they refuse to make any
modifications in the existing production methods.
The Future of Entrepreneurship has gained mileage through a number of ways.
Entrepreneurship is currently being embraced by educational institutions, governments,
societies, and corporations. Schools are increasing their emphasis on entrepreneurship in
terms of courses and academic research.
 Entrepreneurial education.
 Increase in academic research.
 Societal support (media coverage).
 Corporate entrepreneurship.
TRAITS OF SUCCESSFUL ENTREPRENEURSHIP: Although there is no "one size, fits
all" theory for entrepreneurship, a few
guidelines may help those with a good idea
become successful entrepreneurs. The
following insights can help you embark on
your next entrepreneurial venture with due
diligence and successful entrepreneurs all
possess the following traits.
1- Full of determination: The one word that describes the basic requirement for an
entrepreneurship venture is “Passion.”
o Is there something that you can work on over and over again, without getting bored
change ?
o Is there something that keeps you awake because you have not finished it yet?
o Is there something that you have built and want to continue to improve upon, again
and again?
o Is there something that you enjoy the most and want to continue doing for the rest of
your life?
Your demonstration of passion and motivation will determine your success in any
entrepreneurial venture. From building and implementing a prototype, to pitching your idea
to venture capitalists, success is a function of passion and determination.

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2. Not afraid to take risks: Entrepreneurs are risk takers ready to dive deep into a future of
uncertainty. But not all risk takers are successful entrepreneurs. What differentiates a
successful entrepreneur from the rest in terms of risk? Successful entrepreneurs are will to
risk time and money on unknowns, but they also keep resources, plans and bandwidth for
dealing with "unknown unknowns" in reserve. When evaluating risk, a successful
entrepreneur will ask herself, is this risk worth the cost of my career, time and money? And,
what will I do if this venture doesn't pay off?
3. High level of confidence: Entrepreneurs enjoy what they do. They believe in themselves
and are confident and dedicated to their project. Occasionally, they may show stubbornness
(‫)اڑیل‬ in their intense focus on and faith in their idea. But the flip side is their demonstrated
discipline and dedication.
4. Craves learning: Do a feasibility analysis; identify time and capital thresholds; take the
deep dive with your limited resources. If your thresholds are crossed, look for alternatives
and be prepared to take the next exit.
5. Understands failure is part of the game: Entrepreneurship is about building a business
from scratch while managing limited resources including time, money and personal
relationships. It is a long-term commitment, and attempting to plan as much as possible at
the beginning is a noble impulse. In reality, however, planning for everything and having a
ready solution for all possible risks may prevent you from even taking the first step.
Successful entrepreneurs do keep some dry powder in reserve, but more importantly they
maintain a mindset and temperament to capable of dealing with unforeseen possibilities.
6. Passionate about his or her business: Not every attempt will result in success. The failure
rate of entrepreneurial ventures is very high. At times, it is absolutely fine to take the
“practical” exit route and try something new, instead of continuing to make sunk
cost investments in the same venture. Many famous entrepreneurs weren't successful the first
time around. But they had the serenity and foresight to know when to cut their losses.
7. Highly adaptable: It’s good to be passionate or even stubborn about what you do. But
being inflexible about client or market needs will lead to failure. Remember, an
entrepreneurial venture is not simply about doing what you believe is good, but also making
successful business out of it. Market needs are dynamic: changes are a recurring
phenomenon. Successful entrepreneurs welcome all suggestions for optimization or
customization that enhances their offering and satisfies client and market needs. A product
you develop for yourself alone may qualify as a hobby, but a product for the market should
satisfy market needs.
8. Good understanding of money management: It takes time to get to profitability for any
entrepreneurial venture. Till then, capital is limited and needs to be utilized wisely.
Successful entrepreneurs realize this mandatory money management requirement and plan
for present and future financial obligations (with some additional buffer). Even after securing

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funding or going fully operational, a successful businessman keeps a complete handle on
cash flows, as it is the most important aspect of any business.
9. Expert at networking: How do you tap your network for solutions? Many people seek
comfort in commiseration: friends, colleagues and neighbors are happy to complain with you
about "the global slowdown,” poor demand, or unfair competition; but that won't improve
the bottom line. What do successful entrepreneurs do? They reach out to mentors with more
experience and extensive networks to seek valuable advice.
10. Ability to sell and promote: Entrepreneurs know their product offering inside and out.
They also know the marketplace and its dynamics inside and out. Remaining unaware of
changing market needs, competitor moves and other external factors can bring even great
products to failure (for example, Blockbuster).
SPECIFIC ENTREPRENEURSHIP AREAS:
In establishing an Intrapreneurial environment, certain factors and leadership characteristics
need to be present.
First of these is that the organization operates on the frontiers of technology. Since research
and development are key sources for new product ideas, the firm must operate on the cutting
edge of technology and encourage and supporting new ideas instead of discouraging them.
Second is experimentation, or trial and error, is encouraged. Successful new products usually
do not appear fully developed; instead they evolve. A company wanting to establish an
entrepreneurial spirit has to establish an environment that allows mistakes and failures.
Without the opportunity to fail, few corporate entrepreneurial ventures will be developed.
Third an organization should make sure that there are no initial opportunity parameters, such
as turf protection, inhibiting creativity in new product development.
Fourth, the resources of the firm need to be available and easily accessible. Often,
insufficient funds are allocated not to creating something new but instead to solving a
problem that have an immediate effect on the bottom line. Some companies, such as Xerox,
3M, and AT&T have established separate venture capital areas for funding new internal
ventures.
Fifth a multidisciplinary team approach needs to be encouraged. One key to Entrepreneurial
success is the existence of "skunkworks" involving key people. Developing the needed team
work for a new venture is further complicated by the fact that a team member’s promotion
within the corporation is related to performance in the current position, not in the new
venture. The corporate environment must establish a long time horizon for evaluating the
success of the overall program.
Sixth the spirit of entrepreneurship cannot be forced on individuals; it must be
Voluntary. Most managers in a corporation are not capable of being successful
entrepreneurs. Those who do emerge from this self selection process must be allowed the
latitude to carry a project through to completion. An entrepreneur falls in love with the new
venture and will do almost anything to ensure its success.

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Seventh characteristic is a reward system. The entrepreneur needs to be appropriately
rewarded for the energy and effort expended on the new venture. An equity position in the
new venture is one of the best motivational methods.
Eight a corporate environment favorable for entrepreneurship has sponsors and champions
throughout the organization that supports the creative activity and resulting failures.
Finally the entrepreneurial activity must be whole-heartedly supported by top management.
BUSINESS DEVELOPMENT: Entrepreneurship provides the analytical tools and skills for
new business development and in establishing new organizations. The Entrepreneurship
programming provides both the scientific knowledge and the practical skills needed for the
identification and exploitation of new opportunities, while creating new value and well-being
for all stakeholders.
Concept and Scope of Business Development: Business development activities extend
across different departments, including sales, marketing, project management, product
management and vendor management. Networking, negotiations, partnerships, and cost-
savings efforts are also involved. All these different departments and activities are driven by
and aligned to the business development goals.
For instance, a business has a product/service which is successful in one region (say, the
United States). The business development team assesses further expansion potential. After
all due diligence, research and studies, it finds that the product/service can be expanded to a
new region (like Brazil). Let’s understand how this business development goal can be tied to
the various functions and departments:
 Sales: Sales personnel focus on a particular market or a particular (set of) client(s), often
for a targeted revenue number. In this case, business development assesses the Brazilian
markets and concludes that sales worth $1.5 billion can be achieved in three years. With
such set goals, the sales department targets the customer base in the new market with
their sales strategies.
 Marketing: Marketing involves promotion and advertising aimed towards the successful
sale of products to the end-customers. Marketing plays a complementary role in
achieving the sales targets. Business development initiatives may allocate an estimated
marketing budget. Higher budgets allow aggressive marketing strategies like cold-calling,
personal visits, road shows, and free sample distribution. Lower budgets tend to result in
passive marketing strategies, such as limited print and media ads, and billboards.
 Strategic Initiatives or Partnerships: To enter a new market, will it be worth going solo
by clearing all required formalities, or will it be more pragmatic to strategically partner
with local firms already operating in the region? Assisted by legal and finance teams, the
business development team weighs all the pros and cons of the available options, and
selects which one best serves the business.
 Project Management/Business Planning: Does the business expansion require a new
facility in the new market, or will all the products be manufactured in the base country
and then imported into the targeted market? Will the latter option require an additional
facility in the base country? Such decisions are finalized by the business development

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team based on their cost-, time- and related assessments. Then project
management/implementation team swings into action to work towards the desired goal.
 Product Management: Regulatory standards and market requirements vary across
countries. A medicine of a certain composition may be allowed in India but not in the
U.K., for example. Does the new market require any customized version of the product?
These requirements drive the work of product management and manufacturing
departments, as decided by the business strategy. Cost consideration, legal approvals and
regulatory adherence are all assessed as a part of a business development plan.
 Vendor Management: Will the new business need external vendors? For example, will
shipping of product need a dedicated courier service? Or will the firm partner with any
established retail chain for retail sales? What are the costs associated with these
engagements? The business development team works through these questions.
 Negotiations, Networking and Lobbying: A few business initiatives may need expertise
in soft skills. For example, lobbying is legal in some locales, and may become necessary
for penetrating the market. Other soft-skills like networking and negotiating may be
needed with different third-parties such as vendors, agencies, government authorities, and
regulators. All such initiatives are part of business development.
 Cost Savings: Business development is not just about increasing sales, products and
market reach. Strategic decisions are also needed to improve the bottom line, which
include cost-cutting measures. An internal assessment revealing high spending on travel,
for instance, may lead to travel policy changes, such as hosting video conference calls
instead of on-site meetings, or opting for less expensive transportation modes. Similar
cost-saving initiatives can be implemented by outsourcing non-core work like billing and
accounting, financials, IT operations and customer service. Strategic partnerships needed
for these initiatives are a part of business development.
PRODUCTS & SERVICES: To succeed as an entrepreneur, you must develop the ability
to select and offer the right products or services to your customers in a competitive market.
More than any other factor, your ability to make this choice will determine your success or
failure. Product (or service) management includes a wide range of management activities,
ranging from the time that there's a new idea for a product to eventually providing ongoing
support to customers who have purchased the new product. Every organization conducts
product development, whether it's done intentionally or unintentionally. This module
provides a wide overview of considerations in developing and managing a product. How a
product is developed or managed is depends very much on the nature of the organization and
its products, for example, retail, manufacturing, wholesale, etc. Note that different people
might even have different categorizations for the activities described below.
So new products and services are the life and blood of all types of businesses. Investing in
their development isn't an optional extra - it is crucial to business growth and profitability.
There are five key stages in the lifecycle of any product or service.
Development - at this point your product or service is only an idea. You're investing heavily
in research and development.

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Introduction - you launch your product or service. You're spending heavily on marketing.
Growth - your product or service is establishing itself. You have few competitors, sales are
growing and profit margins are good. Now's the time to work out how you can reduce the
costs of delivering the new product.
Maturity - sales growth is slowing or has even stopped. You've been able to reduce
production and marketing costs, but increased competition has driven down prices. Now is
likely to be the best time to invest in a new product.
Decline - new and improved products or services are on the market and competition is high.
Sales fall and profit margins decline. Increased marketing will have little impact on sales and
won't be cost-effective unless new markets are identified.
Manage the lifecycle
Identifying where products or services are in their lifecycle is central to your profitability.
Effective research into your markets and competitors will help you do this. See our guide on
how to understand your competitors.
ENTERPRISES: The term "enterprise" has two common meanings.
Firstly, an enterprise is simply another name for a business. You will often come across the
use of the word when reading about start-ups and other businesses…"Simon Cowell's
enterprise" or "Michelle set up her successful enterprise after leaving teaching".
Secondly, and perhaps more importantly, the word enterprise describes the actions of
someone who shows some initiative by taking a risk by setting up, investing in and running
a business.
Look again at two key words above – initiative and risk.
A person who takes the initiative is someone who "makes things happen". He or she tends
to be decisive. A business opportunity is identified and the person does something about it.
Showing initiative is about taking decisions and being bold – not everyone is like that!
Risk-taking is slightly different. In business there is no such thing as a "sure fire bet". All
business investments carry an element of risk – which is the chance or probability that
things will go wrong. At the worst, the risk of an enterprise might mean the person making
the investment loses all his/her money or becomes personally liable for the debts of the
business.
The trick is to take calculated risks, and to ensure that the likely returns from taking a risk
are enough to make the gamble worthwhile. Someone who shows enterprise is
an "entrepreneur".
MARKETING: Marketing is an important element in a successful of entrepreneurship
development. Elements of the marketing mix can influence decision making in purchasing
by consumers. Marketing should not be seen only as the commercial channel of the company

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that is just there to sell a product. Marketing is an important piece for the management of
internal and external communications, for supporting the creation of tools to improve
customer satisfaction, to create/maintain the company's image and its brands in channels
such as social networks, blogs, and more in order to ensure a good reputation and recognition
to avoid losing current and potential customers.
Another very important task in marketing is its alliance with the commercial department,
because it is through marketing that we define actions to generate new sales, leads or
contracts for a company. People working in the marketing department of a company needs
access to important information - the profit margin of the products, clear definition of the
advantages and features of the product, resources that can be reallocated in monthly
campaigns in order to develop a long term planning, know where competitors are and where
they go, understand how it is done after-sales service, in addition to at least some monthly
resource for developing communication actions. And all this is communicated in the simplest
way possible for all company’s stakeholders.
The role of marketing in Entrepreneurships:
1. Manager and changes architect: Supporting in the redefinition of the strategic guidelines
of the company according to market changes over time, always thinking of the internal and
external customers;
2. Communication facilitator: Set an example; Provide the right tools at the right time;
“Explain” the company for those that are not familiar with it, be clear! Why? Often, and
especially in more "technical" companies, people tend to explain everything in a very
extensively, and very complicated way, not helping the general public to understand what
they want to communicate; Defend the quality of the company’s products/services (how to
improve a product, how to improve customer service, how to give more support to strategic
partners, among others);
3. Company’s image administrator: The Company’s image is very important! It is the soul
of the business. The transmission of trust that is generated is given by the brand. The
company's image is very important for its survival, so all that is passed out have to be very
well defined and felt by everyone within the company.
OPERATIONA: Activities involved in the day to day functions of the business conducted
for the purpose of generating profits.
Business operations encompass three fundamental management imperatives that collectively
aim to maximize value harvested from business assets (this has often been referred to as
"sweating the assets"):
1. Generate recurring income
2. Increase the value of the business assets
3. Secure the income and value of the business

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The three imperatives are interdependent. The following basic tenets illustrate this
interdependency:
 The more recurring income an asset generates, the more valuable it becomes. For
example, the products that sell at the highest volumes and prices are usually considered
to be the most valuable products in a business's product portfolio.
 The more valuable a product becomes the more recurring income it generates. For
example, a luxury car can be leased out at a higher rate than a normal car.
 The intrinsic value and income-generating potential of an asset cannot be realized
without a way to secure it. For example, petroleum deposits are worthless unless
processes and equipment are developed and employed to extract, refine, and distribute
it profitably.
The business model of a business describes the means by which the three management
imperatives are achieved. In this sense, business operations is the execution of the business
model.
MANAGEMENT: Entrepreneurial Organization can be referred to the concepts, skills, and
mindset associated with operating large corporations with greater flexibility, innovation, and
responsiveness. Advances in business knowledge and technology have radically changed
business systems, organization structures and processes. As a result, critical to today's
businesses is the ability to get the right information to the right people at the right time, so
that both strategic and operational decisions are made properly and quickly. Students
majoring in Management and Entrepreneurship will learn to recognize the pivotal role that
information plays in the business world and to use their knowledge to increase business
competitiveness. 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.
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 Knight’s
view, the function of manager thus does not itself imply entrepreneurship
FINANCIAL MANAGEMENT: Financial management of your small business
encompasses more than keeping an accurate set of books and balancing your business
checking account. You must manage your finances so you don’t overspend and so you
remain prepared for all expenditures, as well as profit distributions. Your financial
management responsibilities affect all aspects of your business. A company that sells well

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but has poor financial management can fail. So a good financial management system enables
you to accomplish important big picture and daily financial objectives.
Capital Expenditures: You purchase assets to create income. All your financial
considerations of capital expenditures must balance the amount of income the asset will
produce with the amount it will cost. If you manage your capital expenditures effectively,
you will not overextend your company by borrowing too much for assets that don’t provide
enough income to justify the expense.
Operating Cash: You must manage your cash flow so you always have enough on hand to
pay for rent, utilities, telephone, insurance, payroll and supplies. This means you must look
ahead and see when your accounts receivable are due and compare that to the due dates for
your outstanding bills. You can manage your cash flow by shortening the amount of time
you give customers to pay and by renegotiating due dates with vendors. If you fail to manage
cash flow effectively, you may not be able to pay expenses and keep your company
operating.
Lowering Expenses: One of your financial management responsibilities is to keep costs as
low as possible. You can ask vendors for lower prices, reduce the number of employees you
use, reduce energy use and purchase supplies in bulk. If you do not monitor and manage
costs, your company will always have to increase sales dramatically to pay rising expenses.
Tax Planning: Your financial management duties include planning for taxes. This involves
making sure you have cash on hand to pay estimated tax payments each quarter and also
timing your purchases of major assets to get the maximum benefit. For example, if you know
your current tax year will not require a heavy tax payment but next year will, you can
postpone buying major assets until next year when you will need the tax write-off more.
Failure to plan for taxes and maximize deductions can cause your company to spend more
than it has to on taxes.
The following is a summary of the 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. Cantillon’s 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

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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 Knight’s 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
Mangoldt’s notion of rent-of-ability by adding the element of leadership to “entrepreneurial”
responsibilities. Marshall’s 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.
Entrepreneur as Innovator: Joseph Schumpeter (1883-1950), Austrian-born professor, is

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famous for focusing on the entrepreneur as the central figure in advancing the wealth of
nations and creating dynamic disequilibrium in the global economy. In the process of
“creative destruction” (of the market system), entrepreneurs plays a central role by
constantly assimilating knowledge not yet in current use and setting up new production
forms and functions to produce and market new products. He pointed out that knowledge
underlying the innovation need not be newly discovered and may be existing knowledge that
has never been utilized in production. Therefore, the entrepreneur need not be an inventor
and vice versa. He is the one who turns an invention into commercial exploitation. For
Schumpeter, successful innovation requires an act of will, not of intellect. It therefore
depends on economic leadership and not mere intelligence. He felt that such a hazardous
activity would not be undertaken by ordinary economic agents but only by entrepreneurs
with the vision, drive and commitment to survive the uncertainty and turbulence involved.
When he succeeds, the entrepreneur will realize exceptional (be it temporary monopoly)
profits and he may be able to fundamentally change existing or introduce new market and
industry structures. Therefore, Schumpeter’s theory of “creative destruction” has sometimes
also been known as “heroic entrepreneurship”.
While Schumpeter emphasizes technological innovation and improvement, Ludwig von
Mises (1881-1973) declared that changes in consumer demand may require adjustments,
which have no reference at all to technological innovations and improvements. He thought
that the business of the entrepreneur is not merely to experiment with new technological
methods, but to select those, which are best, fit to supply the public in the cheapest way with
the things they are asking for most urgently. Whether a new technological procedure is or is
not fit for this purpose is provisionally decided by the entrepreneur and finally decided by
the conduct of the buying public. For Mises, the activities of the entrepreneur consist in
making decisions and while decisions regarding innovation and technological improvement
come under his purview, such decisions alone do not constitute an exhaustive set. This
echoed the viewpoint of American economist, F.W.Taussig (1859-1940) that although
innovation is one of the activities performed by the entrepreneur, it is not the only one, and
perhaps not even the most important one.
Peter Drucker (1909-2005) notes that entrepreneurship can be defined as changing the yield
of resources (seen in supply or production terms) or as changing the value and satisfaction
obtained from resources by the consumer (defined in demand terms) and innovation to be the
specific instrument of entrepreneurship. Like Taussig and Mises, Drucker asserts that
innovation does not have to be technical and are often social as well. He argued that
management (as ‘a useful knowledge’) is an innovation of the 20th century as it has made
possible the emergence of the entrepreneurial economy in America and converted modern
society into something brand new: a society of organizations. He therefore prescribed a
systematic form of entrepreneurship management, based on systematic innovation:
“Systematic innovation consists in the purposeful and organized search for changes and in
the systematic analysis of the opportunities such changes might offer for economic or social
innovations”.

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CHARACTERISTICS OF ENTERPRENURESHIP: Entrepreneurship is the act of
setting out on your own and starting a business instead of working for someone else in his
business. While entrepreneurs must deal with a larger number of obstacles and fears than
hourly or salaried employees, the payoff may be far greater as well.
Interest and Vision: The first factor for entrepreneurial success is interest. Since
entrepreneurship pays off according to performance rather than time spent on a particular
effort, an entrepreneur must work in an area that interests her. Otherwise, she will not be able
to maintain a high level of work ethic, and she will most likely fail. This interest must also
translate into a vision for the company's growth. Even if the day-to-day activities of a
business are interesting to an entrepreneur, this is not enough for success unless she can turn
this interest into a vision of growth and expansion. This vision must be strong enough that
she can communicate it to investors and employees.
Skill : All of the interest and vision cannot make up for a total lack of applicable skill. As the
head of a company, whether he has employees or not, an entrepreneur must be able to wear
many hats and do so effectively. For instance, if he wants to start a business that creates
mobile games, he should have specialized knowledge in mobile technology, the gaming
industry, game design, mobile app marketing or programming.
Investment: An entrepreneur must invest in her company. This investment may be
something less tangible, such as the time she spends or the skills or reputation she brings
with her, but it also tends to involve a significant investment of assets with a clear value,
whether they be cash, real estate or intellectual property. An entrepreneur who will not or
cannot invest in her company cannot expect others to do so and cannot expect it to succeed.
Organization and Delegation: While many new businesses start as a one-man show,
successful entrepreneurship is characterized by quick and stable growth. This means hiring
other people to do specialized jobs. For this reason, entrepreneurship requires extensive
organization and delegation of tasks. It is important for entrepreneurs to pay close attention
to everything that goes on in their companies, but if they want their companies to succeed,
they must learn to hire the right people for the right jobs and let them do their jobs with
minimal interference from management.
Risk and Rewards: Entrepreneurship requires risk. The measurement of this risk equates to
the amount of time and money you invest into your business. However, this risk also tends to
relate directly to the rewards involved. An entrepreneur who invests in a franchise pays for

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someone else's business plan and receives a respectable income, while an entrepreneur who
undertakes groundbreaking innovations risks everything on an assumption that something
revolutionary will work in the market. If such a revolutionary is wrong, she can lose
everything. However, if she is right, she can suddenly become extremely wealthy.
CHARACTERISTICS OF ENTREPRENEURS: Starting a business requires the ability to
constantly deal with new problems and challenges; without the traits necessary to withstand
this, "your business could implode on you faster than it started," states start-up business
expert Jason Bowser in his article, "8 Traits of Successful Entrepreneurs," for the U.S.
Department of Commerce. Entrepreneurs who meet and exceed their goals share a few
typical traits and characteristics.
Social vs Solo: The idea of an entrepreneur starting his own business might imply an
individual who prefers to work alone; however, research indicates that entrepreneurs are
often social people, according to Stanford University. Starting a business requires contacting
people to generate funds, purchasing materials from suppliers, hiring employees and
developing social networks in which to promote the business.
Motivated: Entrepreneurs not only must be self-motivated, but they must possess the ability
to motivate others, even in times of stress and potential failure. There is frequently very little,
if any, financial payoff in the initial stages of starting a business, and an entrepreneur must
have passion for his idea and a strong desire to see the project through. He should also be
goal-oriented, able to set goals and to encourage his team to constantly strive to meet them.
Integrity: An intrinsic understanding and adherence to strong ethics is a vital characteristic
of an entrepreneur. While an unethical business owner sometimes experiences immediate
success through deception, such as selling a poor quality product, he will lose clients and
employees in the long run.
Creative: Entrepreneurs are naturally creative individuals who are constantly coming up with
new ideas. This is a never-ending process; once the business is up and running and products
or services are being sold, an entrepreneur studies consumer reaction, conducts market
research and works to improve what his business is offering to stay successful.
Inquisitive: Staying on top of the competition and constantly innovating requires asking
questions, participating in continuing education workshops, attending conferences and
learning from mistakes. An entrepreneur must be confident and have the ability to recognize
when and where he can make improvements to his company, and then take action.
Willing to Fail: There is no such thing as a risk-free start-up business. Entrepreneurs must be
willing to take those risks and deal with failure when it happens. If he fails, rather than
giving up, a true entrepreneur will evaluate his actions, determine where he can make
improvements and make a fresh attempt.
Entrepreneurship Ideas: Entrepreneurs are those rare breed of individuals who, just dreams
about working for themselves, they actually go out and start their own businesses. Often an
entrepreneur may be involved in more than one business venture, either hoping one will
become the cash cow or diversifying revenues among several business concepts. Success
starts with a great concept that is followed by superb business execution.

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ENTREPRENEURSHIP VS MANAGEMENT: Managers and entrepreneurs both play an
important role in the business community. Many of them share some of the same
characteristics, but some differences exist when it comes to the basic traits of each. Managers
play an entirely different role than an entrepreneur unless, of course, an entrepreneur is
managing his own business. In that case, the entrepreneur takes on some the traits of a
manager out of necessity.
Focus: The focus of an entrepreneur and a manager tend to be different when it comes their
overall purpose in a business. An entrepreneur is someone who is concerned primarily with
the necessary components to start up a business. A manager is typically concerned with
sustainability, and has to focus on what can be done within the framework of what he has
been given to work with in an existing enterprise.
Growth: Both managers and entrepreneurs are concerned with business growth. An
entrepreneur begins with the idea of the business from its inception and its potential for
growth in the long run. An analysis of the market and available resources in relation to the
original idea plays a primary role in his business decisions. A business manager is focused
on engendering growth based on available resources. A manager must get employees to
perform at optimal levels, and must make use of non-human resources to create additional
growth beyond basic sustainability.
Innovation: Entrepreneurs tend to be visionaries. They see a trend or a potential market for a
product and turn their vision into a reality. A manager has to concern himself with the vision
of someone else. Entrepreneurs are often innovators in the industry into which they delve,
whereas managers will typically rely upon tried and true methods for running a business.
Managers can be innovators, but they do not start new business or open new markets. They
innovate in terms of the ways that they handle their employees and inspire them to do better,
or in the ways that they increase efficiency with the use of resources, but they do not
typically start something new.
Risk: Entrepreneurs are inherent risk-takers whereas managers are not. This is not to say
that an entrepreneur just takes blind risks; the risks are often calculated, but he does have to
pull the trigger and give the go ahead from time to time. An entrepreneur operates in an
atmosphere of uncertainty, whereas a business manager can only take risks within
parameters established by the employer. A manager has to be more conservative in this
sense, because he is concerned with someone else's business other than his own. Managers
are risk management specialists who assess probability for an entrepreneur or business
owner. They make calculated risks also, but have the assurance, in most cases, that their job
will be there the next day. An entrepreneur doesn't know if his business will succeed or if he
will make any income from his venture.
MARKETING EXAMPLES IN ENTREPRENEURSHIP: Recently that entrepreneurship
has been studied as its own distinct category of business. The amazing success of companies
like Microsoft, Virgin, and Dell has revealed that entrepreneurship is its own class of
business with many unique challenges and opportunities. As the field has received more and
more focus, specific strategies for successful entrepreneurship have begun to emerge. The
primary challenge facing the entrepreneur is competing against larger, better known, and
more resourceful companies. How can a start up with a small staff, limited budget, and
miniscule customer base hope to compete against the giants in their industry? They do this

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by turning their weaknesses into their strengths. By their very nature, start-up companies can
be more flexible and unorthodox than their major competitors.
Marketing is one area where entrepreneurs can actually define a unique identity for
themselves. Think of all the clever ads that came out of the first wave of Internet start-ups.
Pets.com, for example, was able to turn a simple sock puppet into a nationally recognized
spokesperson. Since marketing is a tool that is available to any business willing to invest in
it, it is one of the best ways for emerging companies to define their image in the minds of
consumers.
Many entrepreneurial marketing strategies are born out of necessity. New businesses might
have five or just one person working on their marketing efforts. They work within limited
budgets and have access to a fraction of the resources that their major competitors have.
Luxuries like graphic design teams and advertising consultants are often outside the means
of start-ups, requiring them to find ways to make the maximum impact with limited
resources.
The most common features of entrepreneurial marketing include innovation, risk taking, and
being proactive. Entrepreneurial marketing campaigns try to highlight the company's greatest
strengths while emphasizing their value to the customer. Focusing on innovative products or
exemplary customer service is a way to stand out from competitors. They make this pitch
using cheap and accessible tools including viral videos, Tweets, Facebook pages, and email
marketing. Any and all marketing strategies can be considered as long as they produce
results.
WHAT CAN WE DO IN ENTREPRENEURSHIP: What makes someone a successful
entrepreneur? It certainly helps to have strong technology skills or expertise in a key area,
but these are not defining characteristics of entrepreneurship. Following are additional
requirements that which has contribution under the title of “What can we do”.
Focus on doing just one thing: Initially they focus on demonstrating a concept. Then they
move on to developing a product, followed by getting initial customer traction, then phased
production. A laser focus on one phase at a time enables the highest probability of success at
the lowest burn rate.
Raise capital all the time: Most companies that contact me for advice have no chance of
making it because they tried to bootstrap it, are already short on cash and have no time to
raise capital. Businesses have to grow and that can’t happen unless you’re constantly raising
capital for the next phase.
Solve a big customer problem: One of the biggest mistakes entrepreneurs make is that they
come up with something they want to do that doesn’t solve a big customer problem better
than anyone else. If you can’t come up with that, keep looking. That’s the key to making it.
First figure out the problem. Then solve it.
Come up with a differentiated strategy: You probably won’t nail it right out of the gate –
few startups do – but sooner or later you’ll have to come up with a unique strategy that

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nobody’s thought of and customers can’t resist. Every startup either figures it out eventually
or fails along the way. It’s one or the other
Know their market: Most entrepreneurs are good at something and they want to turn it into a
business. Unfortunately, they don’t know the business side. They just think that, if they do it,
it will sell. Unfortunately, that’s not how competitive markets work. You have to understand
your market, your competitors and your unique customer value proposition.
Have a strong leader with a solid team: There are basics of project management and
building and motivating a team that every founder has to learn to successfully run a venture.
I see startups with founders that have no idea how to manage and enormous gaping holes
where key capabilities need to be all the time. Sad but true.
Work 24x7 and wear lots of hats:If you think you have what it takes to run a startup, get
ready to work 24x7 and wear all sorts of hats. And everyone you hire should be motivated to
do the same. It comes with the territory. If that workaholic energy level isn’t there, chances
are you’re not going to make it.
WHY HAVE TO DO A ENTREPRENEURIAL MANAGER:
The Entrepreneurial Management Unit strives to raise the level of academic work in the field
of entrepreneurship, in methodological rigor, conceptual depth, and managerial applicability.
1. Absorb uncertainty: Shoulder the burden of responsibility for the uncertain outcome of a
new project. As MacMillan explains, "It’s saying to your people, ' If I' m wrong, it’s my
problem, not yours. Therefore you can behave as if the world is going to be the way I have
set it up.' "
2. Frame the challenge: Set forth a project that pushes employees up to, but not beyond, the
limits of their ability.
3. Underwriting/Path-clearing: Create a conducive environment for the entrepreneurial
transformation, negotiating support from key stakeholders inside and outside the firm.
To perform cast enactment, the entrepreneurial leader must fulfill two charges:
1. Build commitment: Promote a willingness among employees to work toward a common
goal, in the sense of traditional, motivating team-building.
2. "Define gravity:" Break down team members' self-imposed perceptual barriers and
stereotypes about what can and can’t be done, in order to produce integrative and decisive
actions. An entrepreneurial leader will have a sense of the degree to which people resources
have been undervalued.
Fulfilling these five roles is the key to the kind of leadership that today’s businesses need to
thrive.
THE BUSINESS PLANING: A business plan is a written description of your business's
future. That's all there is to it--a document that describes what you plan to do and how you

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plan to do it. So Business plans can help perform a number of tasks for those who write and
read them. They're used by investment-seeking entrepreneurs to convey their vision to
potential investors. They may also be used by firms that are trying to attract key employees,
prospect for new business, deal with suppliers or simply to understand how to manage their
companies better.
A good business plan follows generally accepted guidelines for both form and content. There
are three primary parts to a business plan:
 The first is the business concept, where you discuss the industry, your business structure,
your particular product or service, and how you plan to make your business a success.
 The second is the marketplace section, in which you describe and analyze potential
customers: who and where they are, what makes them buy and so on. Here, you also
describe the competition and how you'll position yourself to beat it.
 Finally, the financial section contains your income and cash flow statement, balance
sheet and other financial ratios, such as break-even analyses. This part may require help
from your accountant and a good spreadsheet software program.
The planning process helps an entrepreneur identify exactly what needs to be accomplished
to build the venture, and what human and financial resources are required to implement the
plan. The forecast profit and loss statement provides a means to compare actual results to
what had been forecast, and make corrections to business strategy if shortfalls in revenue
occur.
QUESTIONS EVERY BUSINESS PLAN SHOULD ANSWER: Starting and building
your own business can be overwhelming, while many business owners cringe at the mere
mention of drafting a business plan, it is a great exercise to get your business back on track
and to plan for future growth. More specifically, it forces you to map out where you are now,
where you need to go and most importantly how you plan to get there. If you are a first time
business owner, or have never written a business plan, you may not know where to start.
Below is the list of Questions that Every Business Plan Should Answer:
1) What is the need that your business exists to satisfy?
 Every business exists because of some noticeable opportunity that you have discovered
within the market. So you must clearly define the need and/or problem you are solving
with this business.
2) How will your business satisfy the need?
 Introduce and describe the business itself. Consider including a mission or vision
statement with objectives detailing how the business satisfies the need in the market.
3) How does your company differentiate itself?

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 Describe your business model and competitive advantage. This will help you to outline
how the business will sustain its position within the market.
4) Who will be the key players in the business?
 Name the management team, board and advisers to the business. Highlight their
expertise and experiences.
5) How big is the market you are entering?
 Only after understanding the industry you are entering – its size, attractiveness and
profit potential – can you truly justify the opportunity.
6) Who will you be targeting as customers?
 Narrowing down your target customer will help enhance and define your marketing
strategy.
7) What will be your most effective marketing and promotional strategies?
 Once you’ve identified your target client, you’ll need to develop and implement a
strategy on how best to reach them (e.g. PPC, television, radio, social, etc). And this in
large part will be influenced by where your target client consumes information.
8) What are the economics of your business?
 Define your revenue streams including pricing structure, costs, margins and expenses.
9) How much money is required to get your business started and generating revenue?
 Identify needed capital requirements by determining where your business stands today,
and what is needed in order to move forward. Also, if you are in need of outside
funding, what will be the sources and uses of funds requested.
10) What needs to happen to break-even?
 Play around with financial projections and forecasts to determine the volume of sales
needed to cover your expenses and to become profitable. Include monthly breakdowns
for the first two years.
Addressing these questions will help you build a roadmap for your business and of course
the better the map, the greater the likelihood that you’ll reach your destination!
The People inBusiness Planning: ( It’s not just the products that makes special, it’s the People. Marc Bolland)

Page | 26
The people have the key significance in any business planning and its successful
implementation in accordance. The personnel section will normally include information on
the skills and experience of your management team, and cover your estimated personnel
costs.
Make sure you cover the basic information first. That would include how many employees
the company has, how many managers, and how many of the managers are founders. Is your
organizational structure sound, with job descriptions and logical responsibilities for all the
key members? Is your team complete, or are there gaps still to be filled? Particularly with
start-up companies, you may not have the complete team as you write the plan. In that case,
be sure to point out the gaps and weaknesses and how you intend to fill them. The
organizational structure of a company is what you frequently see as an organizational chart,
also known as an “org chart.” If you have access to a graphic of an organizational chart
(from a drawing program, or one of the specialized organizational charting software
packages available), that works really well at this point. If not, you can just use the text to
describe the organizational structure in words, without a chart.
List the most important members of the management team. Include summaries of their
backgrounds and experience, using them like brief resumes. Describe their functions with the
company. Resumes should be appended to the plan.
Almost all the Business Planes have obvious gaps in the management, especially in start-up
companies, but even in ongoing companies. For example, the manufacturing company
without a production manager has some explaining to do, and the computer company without
service has some problems. It is far better to define and identify a weakness than to pretend it
doesn’t exist. Specify where the team is weak because of gaps in coverage of key
management functions. How will these weaknesses be corrected? How will the more
important gaps be filled?

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The Opportunities in Business Planning: A business opportunity is a packaged business
investment that allows the buyer to begin a business. Listing opportunities, consider
emerging technologies, availability of new materials, new customer categories, changing
customer tastes, market growth, new uses for old products (think about how mobile phones
and even eyeglasses now double as cameras and computers), new distribution or location
opportunities, positive changes in your competitive environment, and other forces that can
affect your success. Market research is critical to business success. A good business plan
analyzes and evaluates customer demographics, purchasing habits, buying cycles, and
willingness to adopt new products and services.
The process starts with understanding your market--and the opportunities inherent in that
market. And that means you'll need to do a little research. Before you start a business you
must be sure there is a viable market for what you plan to offer.
That process requires asking--and more importantly answering--a number of questions. The
more thoroughly you answer the following questions, the better you will understand your
market.
Start by evaluating the market at a relatively high level, answering some high-level questions
about your market and your industry:
 What is the size of the market? Is it growing, stable, or in decline?
 Is the overall industry growing, stable, or in decline?
 What segment of the market do I plan to target? What demographics and behaviors make up
the market I plan to target?
 Is demand for my specific products and services rising or falling?
 Can I differentiate myself from the competition in a way customers will find meaningful? If
so, can I differentiate myself in a cost-effective manner?
 What do customers expect to pay for my products and services? Are they considered to be a
commodity or to be custom and individualized?
The Market Opportunities section provides a sense-check of that analysis, which is
particularly important since choosing the right products and services, is such a critical factor
in business success. Business opportunities offer tools or training to help you start your own
business, but usually at a lower cost and with fewer restrictions than a franchise. You’ll find
business opportunities in a variety of industries listed here, divided into three main
categories: Dealerships and Licensing Opportunities, Network Marketing/Direct Sales, and
Vending Machines.

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Great Entrepreneurial Success Stories: (success does not follow a time clock) The world is full of infinite
possibilities and countless opportunities, but your life and career are finite, meaning you have
limited time to find what you’re searching for and make your mark on the world. This is your time.
It’s limited so don’t waste it. Find something you like to do and just do it. That’s how real
entrepreneurs always start.
The Pierre Omidyar way. In 1995, a computer programmer started auctioning off stuff on his personal
website. AuctionWeb, as it was then known, was really just a personal project, but, when the amount of web
traffic made it necessary to upgrade to a business Internet account, Omidyar had to start charging people fees.
He actually hired his first employee to handle all the payment checks. The site is now known as eBay.
The John Ferolito and Don Vultaggio way. Back in the 70s, a couple of Brooklyn friends started a beer
distributor out of the back of an old VW bus. Two decades later, after seeing how well Snapple was doing
they decided to try their hand at soft drinks and launched AriZona Green Tea. Today, AriZona teas are #1 in
America and distributed worldwide. The friends still own the company.
The Matt Maloney and Mike Evans way. When a couple of Chicago software developers working on
lookup searches for Apartments.com got sick of calling restaurants in search of takeout food for dinner, the
light bulb went off: Why isn’t there a one-stop shop for food delivery? That’s when the pair decided to start
GrubHub, which went public last April and is now valued at more than $3 billion.
The Joe Coulombe way. After operating a small chain of convenience stores in southern California, Joe
Coulombe had an idea: that upwardly mobile college grads might want something better than 7-11. So he
opened a tropical-themed market in Pasadena, stocked it with good wine and booze, hired good people, and
paid them well. He added more locations near universities, then healthy foods, and that’s how Trader Joe’s
got started.
The Howard Schultz way. A trip to Milan gave a young marketer working for a Seattle coffee bean roaster
an idea for upscale espresso cafes like they have all over Italy. His employer had no interest in owning coffee
shops but agreed to finance Schultz’s endeavor. They even sold him their brand name, Starbucks.
The Phil Robertson way. There was a guy who so loved duck hunting that he chose that over playing pro
football for the NFL. He invented a duck call, started a company called Duck Commander, eventually put his
son Willy in charge, and that spawned a media and merchandising empire for a family of rednecks known as
Duck Dynasty.
The Konosuke Matsushita way. In Japan in 1917, a 23-year-old apprentice at the Osaka Electric Light
Company with no formal education came up with an improved light socket. His boss wasn’t interested so
young Matsushita started making samples in his basement. He later expanded with battery-powered bicycle
lamps and other electronic products. Matsushita Electric, as it was known until 2008 when the company
officially changed its name to Panasonic, is now worth $66 billion.
The Steve Wozniak and Steve Jobs way. While they had been friends since high school, the two college
dropouts gained considerable exposure to the computer world while working on game software together on
the night shift at Atari. The third Apple founder, Ron Wayne, was also an Atari alumnus.
The Context in Entrepreneurship: The Entrepreneur mind sets out to explore contexts
for entrepreneurship, illustrating how a contextualized view of entrepreneurship contributes
to our understanding of the phenomenon. There is growing recognition in entrepreneurship
research that economic behavior can be better understood within its historical, temporal,
institutional, spatial, and social contexts, as these contexts provide individuals with
opportunities and set boundaries for their actions. Context can be an asset and a liability for
the nature and extent of entrepreneurship, but entrepreneurship can also impact contexts. The
Entrepreneurial Intentions and Corporate Entrepreneurship argues that context is important
for understanding when, how, and why entrepreneurship happens and who becomes
involved. Exploring the multiplicity of contexts and their impact on entrepreneurship, it

Page | 29
identifies challenges researchers face in contextualizing entrepreneurship theory and offers
possible ways forward.
So a contextualized view on entrepreneurship can add to our knowledge of when, how, and
why entrepreneurship happens. Conceptually, context is a multiplex phenomenon, which
cuts across levels of analysis and influences entrepreneurship directly or indirectly, but
which also is influenced by entrepreneurial activities.
Regulatory Management: Governments and regulatory bodies can play an important role in
accelerating or inhibiting the growth of many companies.
Regulatory management is the process of effectively overseeing the implementation of
standards and regulations for operations that are put in place by government agencies,
allowing a business entity to remain in compliance with those regulations. The scope of this
type of management process will often require that regulatory managers are knowledgeable
in the nature and application of all regulations that have to do with a specific industry. With
the aid of these managers, it is possible to develop various internal policies and procedures
that allow the company to remain in compliance and avoid any type of censure from
government agencies.
The exact nature of regulatory management in Entrepreneurship will vary somewhat, based
on the industry involved. With manufacturing facilities, regulations that have to do with the
handling and disposal of hazardous materials will be a primary concern of the
regulatory manager. Safety measures taken in the workplace will also receive a great deal of
attention, with the manager making sure those measures at least meet with current standards
set by a governmental agency. Compliance with federal and state laws regarding wages and
salaries will also often come under the jurisdiction of a regulatory manager.
The complexity of the business and regulatory landscape is increasing dramatically.
Companies are navigating a proliferation of new regulatory requirements and stakeholder
expectations, and are challenged to do so in a way that supports performance objectives,
sustains value and protects the brand. Critical compliance and regulatory issues include:
 Protecting brand reputation and value
 Meeting the demands and expectations of investors, legislators, regulators, customers,
employees, analysts, consumers and other key stakeholders
 Driving value and managing performance expectations for governance, ethics, risk
management and compliance
 Managing crisis and remediation while defending the organization and its executives /
board members against legal enforcement and the rising impact of fines, penalties and
business disruption
Other industries and professionals will also incorporate regulatory management into their
overall operational strategy. Banks and other financial institutions will include personnel
who can aid in drafting internal policies and procedures that help the operation to be in
compliance with current federal and state regulations. Even major industries such as retail
stores must usually observe a number of governmental regulations in order to avoid incurring
fines and possibly be subject to a temporary closing until the business operation is brought
back into compliance.

Page | 30
So regulatory management is all about making sure
that a company is operating within the boundaries
established by a government entity. Typically, those
regulations have to do with protecting the rights of
consumers, and making sure the work environment is
relatively safe and that specified codes of conduct are
followed when it comes to financial transactions. By
choosing to engage in effective regulatory
management, businesses are able to operate with the
support of the government, sometimes even being able
to receive additional benefits as a result of that compliance. Consumers also benefit, as that
the stores they shop in are relatively safe, the goods they buy meet certain standards, and the
money they place in banks and other financial institutions has a certain amount of protection.
Interest Rates:
In the Context of Entrepreneurship Interest rates are an everyday part of business.
Companies pay interest on money they borrow, and when they have extra cash, they receive
interest when they place that cash in a safe investment. Companies also charge interest when
their customers buy goods and services on credit. A rise or fall in interest rates affects these
business activities as well as the buying habits of the company's customers.
High Interest Rates: Interest rates are related to the amount of money floating through the
economic system, such as cash in banks, cash loaned to consumers via credit cards, car and
home loans, cash paid by businesses to their employees and cash that moves throughout the
business and investment sector. When there is more buying demand relative to the amount of
cash in circulation, that cash is worth more. When banks lend it out, they charge a high rate
of interest that reflects its scarcity value. Investors receive a high rate of interest, because the
financial system needs money to lend out, so financial institutions are willing to pay high
interest rates to attract investor money. High interest rates make it more expensive for
companies to borrow money to finance their operations, payroll and purchases. High rates
also eventually discourage consumers from buying because of the expense involved, which
chokes off economic activity.

Page | 31
Low Interest Rates: Low interest rates represent the presence of plenty of money in the
system. When banks have a lot of cash on hand, they are anxious to lend it out, so they lower
the interest rate they charge on loans. Low interest rates are also reflected in the price of
goods and services, because low rates make the financing of operations, manufacture and
distribution less expensive for companies. Low interest rates also drive investment into the
stock market by investors seeking higher returns on their money than is available in bank
certificates of deposit and bonds. Low rates encourage the pay-down of credit card debt,
because it represents an expensive form of money relative to other loans. Consumers have
few other places for their money to earn high returns on investment, so their extra money
goes into paying down their credit cards.
Fed Monetary Policy: Interest rates are, for the most part, controlled by Federal Reserve
monetary policy. Congress created the Federal Reserve with the mandate to maintain
maximum employment, stable prices and moderate long-term interest rates. To do this, the
Fed must control inflation and deflation. Inflation refers to the presence of too much money
in the system, which raises the prices paid for goods and services, because too much money
lowers the purchasing power of that money. Deflation represents an increase in the
purchasing power of cash because of its scarcity in the hands of consumers and businesses. It
results in a drop in prices, salaries and a slowing of business activity. The Fed removes
money from the system and raises interest rates to discourage inflation, thereby making
credit too expensive for consumers and businesses. This dampens economic activity and
moves the economy into recession. When the economy has slowed enough, the Fed adds
money to the system and lowers interest rates, making it less expensive for business to
finance operations, so they buy plants and equipment, hire more people and economic
activity expands because consumers have more money to buy things.
Business Planning: Companies watch the cycles in interest rates just like consumers watch
for sales in stores. Companies plan for expansion during periods of low interest rates,
because the expense of that expansion is lower than during high-interest rate periods. When
companies expand, they hire more people and pay higher salaries. This puts money into the
consumer sector and results in an increase in consumer purchases. As consumers buy more,
companies raise prices, make more profits and produce more goods and services to meet
growing consumer demand. The increase in business activity and prices offsets the gradual
rise in interest rates as the demand for money increases its value. Eventually, this trend in
rising prices and rising interest rates prompts the Fed to remove money from the system and
raise interest rates so borrowing becomes too expensive, which eventually drives the
economy into recession again.
Interest is charged by lenders as compensation for the loss of the asset's use. In the case of
lending money, the lender could have invested the funds instead of lending them out. With
lending a large asset, the lender may have been able to generate income from the asset
should they have decided to use it themselves.
Simple Interest = P (principal) x I (annual interest rate) x N (years)

Page | 32
Borrowing $1,000 at a 6% annual interest rate for 8 months means that you would owe $40
in interest (1000 x 6% x 8/12).
Compound Interest = P (principal) x [(1 + I (interest rate) N (months)) - 1]
Borrowing $1,000 at a 6% annual interest rate for 8 months means that you would owe
$40.70.
So in Entrepreneurship once you understand the context for running your business, you can
adjust to interest rate moves to protect yourself from negative effects and take advantage of
positive ones. Interest rates can be a signal to either expand your business or pull it back.
Similarly when banks don't see an opportunity to make a reasonably-high interest rate on
their money, they become less likely to take risks on loans. Businesses therefore can't borrow
money for start-up and expansion expenses. Business can slow down to a crawl because
there's no way to fund innovation. In addition, short-term loans to cover cash-flow problems
can be hard to come by. This could cause businesses to be unable to deliver goods and
services to their customers because they don't have the cash to continue operating.
Demographic Trends: Demographic trends reveal developments and changes in human
population. More specifically, demographic trends relate to changes in a population’s age,
gender, geographical location, marital status, educational attainment, employment status,
household income, race, religion, and health.
The significance of Demographic Trends in The Context of Entrepreneurship is illustrated in
details as following:
The Value of Demographic Trends: Staying up to date on the latest demographic trends
enables organizations to identify existing and emerging markets for their products and
services. By evaluating customers’ and prospects’ demographic trends, business decision-
makers can identify changing needs in the marketplace and adjust to them. Demographic
trends can also help organizations spot future spending trends.
When combined with behavioral and attitudinal data, demographics can be used to improve
marketing effectiveness by helping businesses target new customer segments with the right
messages at the right time. When done well, businesses can increase consumer awareness,
improve customer acquisition efforts, and bolster customer retention rates.
Business leaders, marketers, and advertisers can glean valuable insight from demographic
trends. For example, a geographical location might experience a shift in migration patterns.
Without understanding demographic trends for the area, businesses could make decisions on
a customer segment based on conjecture. Evaluating demographic trends for the area,
however, might reveal that there’s a change in the population’s average age, employment
status, income, or wealth—all of which would help businesses better target its customers and
prospects. The more information about a population that business decision-makers can
appropriately group together, the more valuable the data will be to them. This can yield
additional insight such as trends in a population’s socioeconomic status, life stage, and

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