Entrepreneurial Process - Importance of Entrepreneurship

1. Dr. M. Umamageswari
Assistant Professor (Agricultural Economics)
JSA College of Agriculture & Technology
(Affiliated to Tamil Nadu Agricultural University)
Ma. Podaiyur, Tittagudi Tk. ,
Cuddalore District – 606 108

2. 1. Discovery
Step 1. Self discovery
Learning what they enjoy doing
what will you bring to the venture?
What are your strengths and challenges?
Examining the work experience
Relate with potential opportunities

3. Step 2. Identifying opportunities
 looking for needs , wants , problems and
challenges that are not yet being met or dealt
effectively
 Entrepreneur -opportunity seeker.
 First task potential entrepreneur - identify,
explore and then select an attractive business
opportunity.

4.  Opportunity can be defined as an attractive
and excellent project idea which
entrepreneurs search for and accepts such
idea as a basis for his investment decision.
 A good business opportunity must be
capable of being converted into feasible
projects.

5. 1. Good and wide market scope i.e. gap between
present or likely demand and supply.
2. An attractive, acceptable and reliable return on
investment.
Business opportunity need to be analyzed
from the view points of production,
commercial, managerial, potential and
prospective demand for the product,
technical viability etc.

6.  Identification of opportunity involves
following steps.
◦ Preliminary evaluation
◦ Selection of product or service
◦ Conduct a market survey
◦ Contractual program to collect sufficient
information about proposed venture.
◦ Succeeding in the market.

7.  The agribusiness sector comprises
predominantly of four sub systems
1. Input supply sub system
2. Production sub system
3. Output marketing subsystem
4. Services subsystem

8.  It includes all firms that provide input for farm
production, such as seeds, fertilizers, pesticides,
bio-inputs, farm machinery, capital, labour etc.
Feature Implications
Fertilizers mostly public sector
units
Old Technology, Low production, Subsidized
Government regulated – prevent shortages
Fertigation and micronutrients Growing market
Biofertilizers and biocontrol
agents / biopesticides
Less growth, fragmented and small units, no
certification
Pesticides mostly private sector units, new molecules, high
price, Indian companies mostly formulators, Spurious
chemicals
Farm mechanization Growing market, few large private companies –
tractors and power tillers
Seeds Few large companies – Multi National Companies
(MNCs) and national firms, many regional players.
Research and development initiative in private sector
is less

9.  The individual farms were crops, livestock, mulberry and fish
production takes place and firms that are involved in agriculture
allied activities such as sericulture, mushroom, apiary production.
Feature Implications
Entire system
dependent on
agriculture – climate
– natural resources
Fluctuations in farm production, production risk, affects
sustainable production
Fragmented and
scattered farm
holdings
Small marketed surplus, assembling difficult, no
economies of scale, variations in quality, less capital,
mechanization is difficult
Rainfed area 60 % Technology adoption less, low production, more risk
Technology and
yield
Technology adoption is less, high yield gap
Post harvest management – low adoption
Marketing Mostly at farm, low share in consumer rupee, low value
addition

10.  This includes all the firms that are involved in
the marketing channel through which the
produce from the farm, either in the raw or
processed form reaches the consumer in the
domestic or international market. The major
participants are market intermediaries such
as wholesalers, retailers, village merchants,
processors, exporters etc.

11. Feature Implications
Market
intermediaries
Scattered and small size, absorb greater margin,
largely passing on risk to farmers,
Organized
retailing
Growing segment, resistance in some States and
traditional market intermediaries,
Exports Increasing, meeting quality standards is a hurdle, cost
advantage in few crops, stiff competition from other
countries
Imports Fruits, onion, garlic etc., due to low production and
cost advantage, export oriented imports – sugar,
cashew
Processing Less quantity processed, consumer preference and
availability of raw fruits and vegetables for greater
period of the year, growing market, technology at
low level, mostly cottage industries,

12.  It includes all the firms that provide services
such as market information, grading, storage,
transport, farm machinery hiring and
maintenance, technology transfer,
consultancy, commodity exchanges, etc.

13. Feature Implications
Market infrastructure Inadequate, most of the sale at farm gate, transactions
increasing in commodity exchanges
Grading Voluntary, AGMARK. Export - compulsory
Storage Inadequate at farm level and at assembling points,
mostly government owned – Central warehousing, State
Warehousing and rural godowns. Cold storages
inadequate but increasing
Transport / Cold
chains
Inadequate
Organized retailing Growing market, opposition in some states – UP, Kerala
by traders
Technology
development and
transfer
Larger government role
Credit Largely met by nationalized banks – 18 % lending to
priority sector, influenced by government policy on
agriculture

14.  Using creativity and past experience – devise
new and innovative ideas to solve the
problem , or meet a need , and then
narrowing the field to one best idea
 A new venture has to solve a problem and
meet a genuine need.

15.  A business plan is an effective management tool
that outlines how to run business.
 Written guide to the business's success.
 As a management tool, a business plan will help
to determine the goals that need to achieve in
order to operate the business successfully.
 Normally, a business plan is made up of the
following sections:
A. Business / Industry Overview
B. Production Plan
C. Market Plan
D. Financial Plan
E. Human Resources Plan

16. The foundation of business plan is research or
groundwork. Every idea or concept should be
challenged to determine whether or not it has a
reasonable chance of success.
 It should contains the following things
 a. Title Page
The title page immediately and clearly identifies the
subject matter of the document for the reader. If the
plan is being presented to a banker, accountant or
other advisor, it will be less likely to be lost in the
shuffle. The title page should specify the company
name, address, phone number, subject (Business
Plan) and the date completed.

17. b. Table of Contents
c. Mission Statement / Business Vision
 "Mission involves a statement about the type
of customer the organization wishes to serve,
the specific needs of customers and the
means or technology by which it will serve
these needs."-Berkowitz, Kerlin, Rudelius and
Crane, 1991
 Goals then take the broad statement of
mission and translate it into specific and
measurable objectives (goals).

19. d. Business History
The business history quickly outlines the
origins and development of the business. It
helps to identify the long term development
of the business.
e. Business Profile and Summary
The business profile and summary is a
condensed version of the business plan. It
provides the reader with a quick overview of
the highlights of the business plan, making
the business plan easier to read and follow.

20. f. Business Profile and Summary
The business profile and summary is a condensed version
of the business plan. It provides the reader with a quick
overview of the highlights of the business plan, making
the business plan easier to read and follow.
g. Business Organization
Who are the investors in the business plan?
How is management divided among participants in the
business?
How are profits divided?
There are several possible forms of business organization
or ownership. The most common forms are the
proprietorship, partnership, limited company and co-
operative.

21. h. Purpose:
Describe what business the company in, why are in it, what
size it will be, and how will sell the product.
i. Financing Requirements
What investment is required to start this business
operation?
j. Marketing
Who are the target customers and what is the potential
market?
k. Production
What are production targets and how will those targets be
achieved?
l. Labour
What labour requirements will the business have and how
will satisfy those needs?

22. To prepare a plan, need to research the proposed business. The
following sources of information will be helpful in developing the
plan:
 Interviews with other producers
 Extension specialists
 Personal work experience
 Industry consultants
 Library research
 Trade suppliers
 Trade magazines and journals
 Demographic studies
 Industry associations
 Newspaper articles, etc.

23. Raising start-up capital
 Seed investors
 Investors
 partners

24.  Seed capital is the initial funding used to
begin creating a business or a new product.
Obtaining seed capital is the first of four
funding stages required for a startup to
become an established business.
 Sum of money - founder's personal assets,
friends, or family.
 It generally covers only the first essentials
such as a business plan and initial operating
expenses.

25.  Generally, seed capital is used to develop a business idea
to the point that it can be presented effectively to venture
capital firms that have large amounts of money to invest. If
they like the idea, those firms generally get a stake in the
new venture in return for investing in its development.
 Venture capitalists provide the lion's share of the money
needed to start a new business. It is a considerable
investment, paying for product development, market
research, and prototype production. Most startups at this
stage have offices, a staff, and consultants, even though
they may have no actual product.
 So-called mezzanine financing is sometimes necessary to
support a business into its introductory phase. This is
usually available only to businesses with a track record,
and even then at a high rate of interest.
 The initial public offering is the stage when early investors
get their payday, and a young business raises sufficient
capital to keep growing and expanding

26.  Launching the venture
 Developing customer base
 Adjusting marketing and operational plans as
required

27.  Expansion of business
 Following strategic plan

28. Discovery
Evaluating the
idea
Development
of business
plan
Actualization/
implementation
Harvesting

29.  Development of managerial capabilities:
◦ An entrepreneur studies a problem, identifies its
alternatives, compares the alternatives in terms of cost
and benefits implications, and finally chooses the best
alternative.
◦ sharpening the decision making skills of an entrepreneur
◦ creating new technologies and products in place of older
technologies and products resulting in higher
performance
 Creation of organisations:
◦ entrepreneurs assemble and coordinate physical, human
and financial resources and direct them towards
achievement of objectives through managerial skills.

30.  Improving standards of living:
◦ entrepreneurship helps in making a wide variety of
goods and services
 Means of economic development:
◦ Entrepreneurship involves creation and use of
innovative ideas, maximisation of output from
given resources, development of managerial skills,
etc., and all these factors are so essential for the
economic development of a country.