M&E Module3.docx

MANAGEMENT AND ENTREPRENEURSHIP FOR IT INDUSTRY (18CS51)
Dr.G.M.Swamy, JSSATE, Bangalore-560060 Mob: 9739125899 Email: gmswamy@jssateb.ac.in
SEMESTER – V
Module – 3
Entrepreneur – meaning of entrepreneur, characteristics of entrepreneurs, classification and types of
entrepreneurs, various stages in entrepreneurial process, role of entrepreneurs in economic development,
entrepreneurship in India and barriers to entrepreneurship. Identification of business opportunities,
market feasibility study, technical feasibility study, financial feasibility study and social feasibility
study.
Entrepreneur: An entrepreneur is an enterprising individual who builds capital through risk and/or
initiative. The term was originally a loanword from French and was first defined by the Irish French
economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to
help launch a new venture or enterprise and accept full responsibility for the outcome. Jean- Baptiste
Say, a French economist, is believed to have coined the word "entrepreneur" in the 19th century - he
defined an entrepreneur as "one who undertakes an enterprise, especially a contractor, acting as
intermediatory between capital and labour".
Characteristics of Entrepreneurs
1. Mental Ability - It consists of intelligence and creative thinking. An entrepreneur must be reasonably
intelligent, and should have creative thinking and must be able to engage in the analysis of various
problems and situations in order to deal with them. The entrepreneur should anticipate changes and must
be able to study the various situations under which decisions have to be made.
2. Clear Objectives - An entrepreneur should have a clear objective as to the exact nature of the
business, the nature of the goods to be produced and subsidiary activities to be undertaken. A successful
entrepreneur may have the objective to establish the product, to make profit or to render social service.
3. Business Secrecy - An entrepreneur must be able to guard business secrets. Leakage of business
secrets to trade Competitors is a serious matter, which should be carefully guarded against by an
entrepreneur. An entrepreneur should be able to make a proper selection of his assistants.
4. Human Relation Ability - The most important personality factors contributing to the success of an
entrepreneur are emotional stability, personal relations, consideration and tactfulness. An entrepreneur
must maintain good relation with his customers if he is to establish relations that will encourage them to
continue to patronize his business. He must also maintain good relations with his employees if he is to
motivate them to perform their jobs at a high level of efficiency. An entrepreneur who maintains good
human relation with customers, employees, suppliers, creditors and the community is much more likely
to succeed in his business that the individual who does not practice good human relations.
5. Communication Ability - It is the ability to communicate effectively. Good communication also
means that both the sender and the receiver understand each other and are being understood.
An entrepreneur who can effectively communicate with customers, employees, suppliers and creditors
will be more likely to succeed than the entrepreneur who does not.
6. Technical Knowledge - An entrepreneur must have a reasonable level of technical knowledge.
Technical knowledge is the one ability that most people are able to acquire if the try hard.
Types of entrepreneurs:

The entrepreneurs have been broadly classified according to the type of business, use of professional
skills, motivation, growth and stages of development. The various types of entrepreneurs are as
described below.
Type of entrepreneurs
1) According to the type of business
i) Business entrepreneur
ii) Trading entrepreneur
ii) Industrial entrepreneur
(a) Large
(b) medium
(c) small and
(d) tiny
iv) Corporate entrepreneur
v) Agricultural entrepreneur
(a) plantation
(b) horticulture
(c)d airy
(d)forestry
vi) Retail entrepreneur
vii) Service entrepreneur
2) According to the use of technology
i)technical
ii)non technical
iii)professional
iv)high tech
v)low tech
3) According to the motivation
i)pure
ii)induced
iii)motivated
iv)spontaneous
4) According to growth
i)growth
ii)super growth
5) According to stages of development
i)first generation
ii)modern
iii)classical
6) According to the area
i)urban
ii)rural
7) According to the gender and age
i)men
ii)women

iii)young
iv)old
8) According to the sale of operation
i)small
ii)medium
iii)large
9) Others or unclassified
i)professional
ii)non-professional
iii)modern
iv)traditional
v)skilled
vi)non-skilled
vii)forced
viii)inherited
ix)national
x)international
1) Entrepreneurs according to the type of business:
i) Business entrepreneurs: are individuals who conceive an idea for a new product or service and then
create a business to materialize their idea into reality. Called small business entrepreneurs when found in
small business (printing press, textile processing house, ad agency, readymade garments, confectioneries
etc)
ii) Trading partner Trading entrepreneur undertakes trading activities not concerned with
manufacturing work. Identifies potential markets, stimulates demand for his product line and creates
interest and desire among buyers to go for his product.
iii) Industrial entrepreneur: is essentially a manufacturer who identifies the potential needs of the
customers and tailors a product according to the needs of the customers. Starts an industrial unit to make
new product. Has the ability to convert economic resources and technology into a profitable venture.
ex(electronics industry, textile units etc)
iv) Corporate entrepreneur :Corporate entrepreneur is an individual who demonstrates his innovative
skill in organizing and managing a corporate undertaking. is an individual who plans develops and
manages a corporate body which is form of business organization registered under the trust act.
v) Agricultural entrepreneur :Are those who undertake agricultural activities as raising and marketing
of crops, fertilizers and other inputs of agriculture Raise agriculture through mechanization, irrigation
and application of technologies of dry land agricultural products and covers a broad spectrum of
agricultural sector.
2)Entrepreneurs in technology classified as
i)Technical: Concentrates more on production than through sales and marketing through the
demonstration of his innovative abilities in matter of production of goods and rendering of services and
skills in production techniques.
ii) Non-technical: Not concerned with technical aspects of the product and are concerned only with the
alternative distribution and marketing strategies to promote their business.

iii) Professional entrepreneur: Are the person whose interest is to establish a business but does not
deal with its management and organizing it, they sells out the established business and starts other
venture. He is very dynamic with new ideas and venture.
3) Entrepreneur according to motivation
Are those entrepreneurs who use the motivated as a force to achieve their objectives classified as (i)
Pure: Is an individual who is motivated by the cycological and economic rewards. And undertakes an
entrepreneurial activity out of personal satisfaction, ego and status.
(ii) Induced: Is one who is induced to take up entrepreneurship task due to the policy measures of the
government which provides assistance, incentives, concessions and necessary overhead facilities to star
new venture.
(iii) Motivated entrepreneurs: Are motivated by the desire of self fulfillment. They come into being
because of the making and marketing of the new product for the use of customers who is further
motivated by the reward in terms of profit.
(iii) Spontaneous entrepreneur: Start their business by their natural talents are the persons who take
initiative, are bold confidence and have strong conviction in their inborn ability.
4) Growth and entrepreneurs: Growth: Are those entrepreneurs who take a high growth industry
which has substantial growth prospectus.
Super growth entrepreneurs: Are those who have shown enormous growth of performance in their
venture and Identified by liquidity of funds, profitability and gearing.
5) Entrepreneurs and stages of development:
(i)First generation: One who starts an industrial unit by his innovative skill who essentially an
innovator who combines different technologies to produce a marketable product or service.
(ii)Modern: Undertaking those ventures which suit to the changing and current demands in the market.
(iii)Classical: Is one who is concerned with the customers an marketing needs through the development
of a self-supporting venture and is a stereotype entrepreneur whose aim is to maximize the his returns at
a consistent level with the survival of the firm.
Others
i) Innovative:Are those who exhibit their cleverness in putting attractive possibilities into practice. Are
often involved in changing the utility, value, economic characteristics of old established products into
something new, attractive and utility and Are commonly found in developed countries
ii)Imitative: Are those characterized by the readiness to adopt successful innovations by entrepreneurs
who imitate techniques and technology innovated by others , and are more adoptive and flexible. Are
also revolutionary and important who exploit possibilities and are often involved in subjective
innovation which means the ability to do the things which have not been done by a particular
industrialist before.
Types of entrepreneurs:
The literature has distinguished among a number of different types of entrepreneurs, for instance:

Social entrepreneur
A social entrepreneur is motivated by a desire to help, improve and transform social, environmental,
educational and economic conditions. Key traits and characteristics of highly effective social
entrepreneurs include ambition and a lack of acceptance of the status quo or accepting the world "as it
is". The social entrepreneur is driven by an emotional desire to address some of the big social and
economic conditions in the world, for example, poverty and educational deprivation, rather than by the
desire for profit. Social entrepreneurs seek to develop innovative solutions to global problems that can
be copied by others to enact change.
Social entrepreneurs act within a market aiming to create social value through the improvement of goods
and services offered to the community. Their main aim is to help offer a better service improving the
community as a whole and are predominately run as nonprofit schemes. Zahra et al. (2009: 519) said
that social entrepreneurs make significant and diverse contributions to their communities and societies,
adopting business models to offer creative solutions to complex and persistent social problems.
Serial entrepreneur
A serial entrepreneur is one who continuously comes up with new ideas and starts new businesses. In the
media, the serial entrepreneur is represented as possessing a higher propensity for risk, innovation and
achievement.
Lifestyle entrepreneur
A lifestyle entrepreneur places passion before profit when launching a business in order to combine
personal interests and talent with the ability to earn a living. Many entrepreneurs may be primarily
motivated by the intention to make their business profitable in order to sell to shareholders.[examples
needed] In contrast, a lifestyle entrepreneur intentionally chooses a business model intended to develop
and grow their business in order to make a long-term, sustainable and viable living working in a field
where they have a particular interest, passion, talent, knowledge or high degree of expertise.[6] A
lifestyle entrepreneur may decide to become self employed in order to achieve greater personal freedom,
more family time and more time working on projects or business goals that inspire them. A lifestyle
entrepreneur may combine a hobby with a profession or they may specifically decide not to expand their
business in order to remain in control of their venture. Common goals held by the lifestyle entrepreneur
include earning a living doing something that they love, earning a living in a way that facilitates self-
employment, achieving a good work/life balance and owning a business without shareholders. Many
lifestyle entrepreneurs are very dedicated to their business and may work within the creative industries
or tourism industry,[7] where a passion before profit approach to entrepreneurship often prevails. While
many entrepreneurs may launch their business with a clear exit strategy, a lifestyle entrepreneur may
deliberately and consciously choose to keep their venture fully within their own control. Lifestyle
entrepreneurship is becoming increasing popular as technology provides small business owners with the
digital platforms needed to reach a large global market. Younger lifestyle entrepreneurs, typically those
between 25 and 40 years old, are sometimes referred to as Treps.
Cooperative entrepreneur
A cooperative entrepreneur doesn't just work alone, but rather collaborates with other cooperative
entrepreneurs to develop projects, particularly cooperative projects. Each cooperative entrepreneur
might bring different skill sets to the table, but collectively they share in the risk and success of the
venture.

Evolution of Entrepreneurship
Entrepreneurship existed in very early stages in different kinds.
(i) Early period: An example of Marco Polo who tried to trade routes to far east. He used to sign a
contract with a venture capitalist to sell his goods. The capitalist was the risk bearded, the merchant took
the role of trading, bearing all risks. After successful selling of goods the profit were shared by the
capitalist and merchant.
(ii) Middle Ages: Entrepreneur was referred to a person who was managing large projects. He was not
taking any risk but was managing using resources provided. Example castles, cathedrals, etc.
(iii) 17th Century: Risk with entrepreneurship has evolved. There is a contractual agreement with
government to perform a service or supply goods. Since contract price is fixed and profit or loss was
borne by the entrepreneur.
Another example is buy the goods at certain price and sell at uncertain price, hence operating at risk.
(iv) 18th and 19th Century: As a result of industrialization during 18th
century the person with capital
(capitalist) is differentiated form the person who need capital (entrepreneur). Many technical inventors
did not have money to run their inventions into product. Hence capitalist should finance them.
(v) 20th Century: The entrepreneur organizes and operates an enterprise for personal gains. He takes
risk, contributes his own initiative, skills, he plans, organizes and leads his enterprise. He owns and
bears loss and gain. Innovations can be seen in history from the Egypt who had designed, planned and
erected pyramids with very heavy stone blocks, and recent technologies in cell phones an artificial pace
maker in human heart. As advances in science and technology, innovative ability and risk taking has
been present in all generations.
Essential Functions of an Entrepreneur
An entrepreneur performs a series of functions necessary right from the genesis of an idea up to the
establishment and effective operation of an enterprise. He carries out the whole set of activities of the
business for its success. He recognizes the commercial potential of a product or a service, formulates
operating policies for production, product design, marketing and organisational structure. He is thus a
nucleus of high growth of the enterprise.
According some economists, the functions of an entrepreneur is classified into five broad categories:
1. Risk-bearing function,
2. Organizational function,
3. Innovative function,
4. Managerial function, and
5. Decision making function.
1. Risk-bearing function:
The functions of an entrepreneur as risk bearer are specific in nature. The entrepreneur assumes all
possible risks of business which emerges due to the possibility of changes in the tastes of consumers,

modern techniques of production and new inventions. Such risks are not insurable and incalculable. In
simple terms such risks are known as uncertainty concerning a loss.
The entrepreneur, according to Kinght, "is the economic functionary who undertakes such responsibility
of uncertainty which by its very nature cannot be insured nor capitalised nor salaried too. "
Richard Cantillon conceived of an entrepreneur as a bearer of non-insurable risk because he described
an entrepreneur as a person who buys things at a certain price and sells them at an uncertain price.
Thus, risk bearing or uncertainty bearing still remains the most important function of an entrepreneur
which he tries to minimise by his initiative, skill and good judgement. J.B. Say and other have stressed
risk taking as the specific function of the entrepreneur.
2. Organisational Function:
Entrepreneur as an organiser and his organising function is described by J.B. Say as a function whereby
the entrepreneur brings together various factors of production, ensures continuing management and
renders risk-bearing functions as well. His definition associates entrepreneur with the functions of
coordination, organisation and supervision. According to him, an entrepreneur is one who combines the
land of one, the labour of another and the capital of yet another and thus produces a product. By selling
the product in the market, he pays interest on capital, rent on land and wages to labourers and what
remains is his/her profit. In this way, he describes an entrepreneur as an organiser who alone determines
the lines of business to expand and capital to employ more judiciously. He is the ultimate judge in the
conduct of the business.
Marshall also advocated the significance of organisation among the services of special class of business
undertakers.
3. Innovative Function:
The basic function an entrepreneur performs is to innovate new products, services, ideas and information
for the enterprise. As an innovator, the entrepreneur foresees the potentially profitable opportunity and
tries to exploit it. He is always involved in the process of doing new things. Ac cording to Peter Drucker,
"Innovation is the means by which the entrepreneur either creates new wealth producing resources or
endows existing resources with enhanced potential for creating wealth". Whenever a new idea occurs
entrepreneurial efforts are essential to convert the idea into practical application.
J.A. Schumpeter considered economic development as a descrete dynamic change brought by
entrepreneurs by instituting new combinations of production, i.e. innovation. According to him
innovation may occur in any one of the following five forms.
The introduction of a new product in the market with which the customers are not get familiar with.
Introduction of a new method of production technology which is not yet tested by experience in the
branch of manufacture concerned.
The opening of a new market into which the specific product has not previously entered.
The discovery of a new source of supply of raw material, irrespective of whether this source already
exists or has first to be created.

The carrying out of the new form of oranisation of any industry by creating of a monopoly position or
the breaking up of it.
4. Managerial Function:
Entrepreneur also performs a variety of managerial function like determination of business objectives,
formulation of production plans, product analysis and market research, organisation of sales procuring
machine and material, recruitment of men and undertaking, of business operations. He also undertakes
the basic managerial functions of planning, organising, coordinating, staffing, directing, motivating and
controlling in the enterprise. He provides a logical and scientific basis to the above functions for the
smooth operation of the enterprise thereby avoids chaos in the field of production, marketing,
purchasing, recruiting and selection, etc. In large establishments, these managerial functions of the
entrepreneur are delegated to the paid managers for more effective and efficient execution.
5. Decision Making Function:
The most vital function an entrepreneur discharges refers to decision making in various fields of the
business enterprise. He is the decision maker of all activities of the enterprise. A. H. Cole described an
entrepreneur as a decision maker and attributed the following functions to him.
He determines the business objectives suitable for the enterprise.
He develops an organization and creates an atmosphere for maintaining a cordial relationship with
subordinates and all employees of the organization.
He decides in securing adequate financial resources for the organisation and maintains good relations
with the existing and potential investors and financiers.
He decides in introducing advanced modern technology in the enterprise to cope up with changing
scenario of manufacturing process.
He decides the development of a market for his product, develops new product or modify the existing
product in accordance with the changing consumer's fashion, taste and preference.
He also decides to maintain good relations with the public authorities as well as with the society at large
for improving the firms image before others.
Intrapreneurship
In 1992, The American Heritage Dictionary acknowledged the popular use of a new word, intrapreneur,
to mean "A person within a large corporation who takes direct responsibility for turning an idea into a
profitable finished product through assertive risk-taking and innovation". Intrapreneurship is now known
as the practice of a corporate management style that integrates risk-taking and innovation approaches, as
well as the reward and motivational techniques, that are more traditionally thought of as being the
province of entrepreneurship.
CONCEPT OF ENTERPRENEURSHIP:
1. Entrepreneurship is the process of creating value by bringing together a unique package of resources
to exploit an opportunity.2. Entrepreneurship is the pursuit of opportunity without regard to resources
currently controlled. From both definitions above, we can note that Entrepreneurs are opportunity

driven. Opportunity comes from changes in the environment, and one characteristic of Entrepreneurs is
that they are good a seeing patterns of change. It is also evident that Entrepreneurs are not resource
driven -while the manager asks, "Given the resources under my control, what can I achieve?" the
Entrepreneur asks "Given whatI want to achieve, what resources do I need to acquire?"
Difference between Intrepreneur and Entrepreneur:
Intrapreneur is a person who focuses on innovation and creativity and who transforms a dream or an
idea into a profitable venture, by operating within the organizational environment. Intrapreneurs, by
definition, embody the same characteristics as the Entrepreneur, conviction, passion, and drive. If the
company is supportive, theIntrapreneur succeeds. When the organization is not, the Intrapreneur usually
fails or leaves to start a new company. An Intrapreneur thinks like an entrepreneur seeking out
opportunities, which benefit the corporation. It was a new way of thinking, in making companies more
productiveand profitable. Visionary employees who thought like entrepreneurs. IBM is one of the
leading companies, which encourages INTRAPRENEUR.
Intrapreneur Entrepreneur
Goal
management
Independent, innovates new ideas Independent, starts new venture and leads
direct involvement.
Status Not concerned about traditional status,
but wants recognition
Not concerned about status
Risk Owns moderate risk Bears all the risk and uncertainty
Rewards Gets fixed reward for his work. Many
extra for his innovations
Since there is risk, he may get profit or loss
depending on outcome.
Innovation Innovative Very Innovative
Decision
making
Moderate, limited to his work Very much involved in decision making.
Main difference between Entrepreneurship and Intrapreneurship:
There are, of course, a few things that are different between Intrapreneurship and Entrepreneurship. For
starters, the Intrapreneur acts within the confines of an existing organisation. The dictates of most
organisations would be that the Intrapreneur should ask for permission before attempting to create a
desired future - in practice, the Intrapreneur is more inclined to act first and ask for forgiveness than to
ask for permission before acting. The Intrapreneur is also typically the intra-organisational revolutionary
– challenging the status quo and fighting to change the system from within. This ordinarily creates a
certain amount of organisational friction. A healthy dose of mutual respect is required in order to ensure
that such friction can be positively channeled. On e advantage of Intrapreneurship over Entrepreneurship
is that Intrapreneur typically finds a ready source of "free" resources within the organisation which can
be Stages of Entrepreneurship.
Various stages in entrepreneurial process
There are six stages of an entrepreneurial venture that founders of companies will encounter. The six
steps are:
1) CONVICTION 2) IDEA 3) CONCEPT 4) VENTURE 5) BUSINESS 6) SUSTAINABLE
BUSINESS
Stage 1: CONVICTION

No matter the stage of the business when an individual begins his/her entrepreneurial journey, every
entrepreneur must address his/her conviction to be an entrepreneur. This sounds trivial, but I believe it is
the most important step in the process. It SHOULD be the first step; however, many entrepreneurs wait
until the VENTURE stage to address it. This can lead to grave problems. In the CONVICTION stage, an
entrepreneur needs to figure out if he/she has the conviction to withstand the fundamental issues of
entrepreneurship.
Stage 2: IDEA
The IDEA stage is the easiest stage. Everyone has an idea for a business. This is also the most fun stage
because the cost is zero and the excitement level high. Of course, the IDEA stage is the basis for every
other stage so it cannot be dismissed; however, as an entrepreneur, you should never confuse an "idea"
for a "concept". As you will see in the next step, a concept has much more structure than an idea and
subsequently warrants a different concerns and decision making
Stage 3: CONCEPT
As mentioned above, a concept is characterized by structure. In the CONCEPT stage, you take your idea
and employ a certain intellectual rigor which includes:
- Extensive market research
- Development of the business model
- Conceptualization of the type of the team required to execute
- Engagement of informal and formal advisors
Stage 4: VENTURE
This is the most challenging stage of the business and for many entrepreneurs the most fun...well at least
in the beginning. The VENTURE stage is characterized by significant investment. This investment
typically comes in two forms: money and time. In most cases, as the entrepreneur, it is "your" money
and "your" time; and those can often be significant.
Stage 5: BUSINESS
The BUSINESS stage is where all entrepreneurs strive to be. This is the stage where you have revenues
that are commensurate with your expenses. Of course, there may be unprofitable months or years, but in
general, the business can support itself with little outside capital. This is the stage where you are most
likely to find investors.
Stage 6: SUSTAINABLE BUSINESS
Although most entrepreneurs are satisfied to build a Business, they should strive to become a
Sustainable Business. There are unique challenges to creating a sustainable business and it can be
defined in different ways. It is typically characterized by time. Ventures that last 10+ years may be
thought of as sustainable; however, the real challenge is for a business to outlast the involvement of its
founders. That is a more relevant definition of a sustainable business.
The Role of the Entrepreneur
Entrepreneurs occupy a central position in a market economy. For it's the entrepreneurs who serve as the
spark plug in the economy's engine, activating and stimulating all economic activity. The economic
success of nations worldwide is the result of encouraging and rewarding the entrepreneurial instinct.
A society is prosperous only to the degree to which it rewards and encourages entrepreneurial activity
because it is the entrepreneurs and their activities that are the critical determinant of the level of success,
prosperity, growth and opportunity in any economy. The most dynamic societies in the world are the
ones that have the most entrepreneurs, plus the economic and legal structure to encourage and motivate
entrepreneurs to greater activities.

For years, economists viewed entrepreneurship as a small part of economic activity. But in the 1800s,
the Austrian School of Economics was the first to recognize the entrepreneur as the person having the
central role in all economic activity. Why is that?
Because it's entrepreneurial energy, creativity and motivation that trigger the production and sale of new
products and services. It is the entrepreneur who undertakes the risk of the enterprise in search of profit
and who seeks opportunities to profit by satisfying as yet unsatisfied needs.
Entrepreneurs seek disequilibrium--a gap between the wants and needs of customers and the products
and services that are currently available. The entrepreneur then brings together the factors of production
necessary to produce, offer and sell desired products and services. They invest and risk their money--and
other people's money--to produce a product or service that can be sold at a profit.
More than any other member of our society, entrepreneurs are unique because they're capable of
bringing together the money, raw materials, manufacturing facilities, skilled labor and land or buildings
required to produce a product or service. And they're capable of arranging the marketing, sales and
distribution of that product or service.
Entrepreneurs are optimistic and future oriented; they believe that success is possible and are willing to
risk their resources in the pursuit of profit. They're fast moving, willing to try many different strategies
to achieve their goals of profits. And they're flexible, willing to change quickly when they get new
information.
Entrepreneurs are skilled at selling against the competition by creating perceptions of difference and
uniqueness in their products and services. They continually seek out customer needs that the competition
is not satisfying and find ways to offer their products and services in such a way that what they're
offering is more attractive than anything else available.
Entrepreneurs are a national treasure, and should be protected, nourished, encouraged and rewarded as
much as possible. They create all wealth, all jobs, all opportunities, and all prosperity in the nation.
They're the most important people in a market economy--and there are never enough of them.
As an entrepreneur, you are extremely important to your world. Your success is vital to the success of
the nation. To help you develop a better business, one that contributes to the health of the economy, I'm
going to suggest that you take some time to sit down, answer the following questions, and implement the
following actions:
What opportunities exist today for you to create or bring new products or services to your market that
people want, need and are willing to pay for? What are your three best opportunities?
1. Identify the steps you could take immediately to operate your business more efficiently, especially
regarding internal operating systems.
2. Tell yourself continually "Failure is not an option." Be willing to move out of your comfort zone, to
take risks if necessary to build your business.

3. Use your creativity rather than your money to find new, better, cheaper ways to sell your products or
reduce your costs of operation. What could you do immediately in one or both of these areas?
4. Imagine starting over. Is there anything you're doing today that, knowing what you now know, you
wouldn't get into or start up again?
5. Imagine reinventing your business. If your business burned to the ground today, and you had to start
over, what would you not get into again? What would you do differently?
Entrepreneurship in India – hype or happening?
Sramana is doing a series on Entrepreneurship – Innovation in India for Forbes and requested my
perspective about the same. I chose to write down my thoughts as a post and seek out your thoughts
about it as well.
When it comes to entrepreneurship in India, for the longest time now, it seems that most of us have been
rehashing, repeating and regurgitating the same things over and over again:
Its time we really took a deep, hard look at what is the current state of entrepreneurship in India, what is
broken and how can we really fix it?
In all fairness, I am not on ground zero. And so it may seem as inappropriate to many that I speak of
entrepreneurship in India while residing in the US. You might very well dismay opinions expressed
below based on the same grounds, and in that case, I welcome your perspective – hopefully we can have
a healthy discussion via the comments. In my defense, even though I‘m not at ground zero, I have been
closely monitoring the startup and entrepreneurship scene in India over the last couple of years. I‘ve
talked to lots of Indian entrepreneurs, tech enthusiasts and VC‘s over this time – enough to form an
opinion.
If someone who‘s totally ignorant about the Indian market walks up to me and asks me about
entrepreneurship in India – my answer to them would be that its more hype than happening. The
awareness about entrepreneurship is definitely increasing incredibly, but not enough converts yet. Lots
of wannapreneurs, but few actual entrepreneurs. Again, my goal is not to ridicule or point fingers, but
rather narrow down on what‘s broken.
Some of the most commonly attributed reasons for the lack of entrepreneurship in India:
Lack of funding:
Is lack of funding that much of a big deal really ? The cost to do a technology startup has gone down
drastically. Reduced hardware costs, bandwidth costs have dropped, cloud computing and open source
technologies make it really cheap to launch a technology startup. Unless you are launching a capital
intensive business, why should you really need outside funding for doing a startup ?
Look at the Y combinator model – $5k – $10K per startup, which is literally peanuts if you need to
survive in Silicon Valley. Why cant Indian entrepreneurs be cheap in a similar way? Why not bootstrap?
No Ecosystem:

If you would have made this argument 5 years back, I‘d probably have agreed. But over the last few
years, the startup ecosystem has improved by leaps and bounds. VC‘s have entered the Indian market,
events and conferences are helping the startup community to network and converge, B- plan
competitions on various campuses are raising awareness, an active and vibrant community is forming
around entrepreneurship.
Bureaucratic red-tape:
While I agree that some things in this aspect are not as smooth as in other countries. However, most of
the entrepreneurs I talked to did not cite this as a major hindrance as part of their entrepreneurial
journey. Hire a chartered accountant and he will take care of majority of the initial process of
incorporation, taxation and other legalities.
No Product Companies:
I for one don’t really buy into this argument. While I agree that product companies may offer long term
sustenance value (while current outsourcing focused services companies are simply benefiting from the
cost advantage), but then entrepreneurship is still entrepreneurship – be it a services or a product
company.
Below are some of the reasons that I personally think have a strong impact on entrepreneurship in India:
Revamping Education:
If you look at the success of Silicon Valley, one of the key factors that was instrumental in shaping it
was Stanford & UC Berkeley. Ditto is the case with Israel‘s Technion. I strongly believe that education,
innovation and entrepreneurship go hand in hand – especially technology innovation. While the IIT‘s
have immensely successful alumni, the IIT‘s have not been able to create a fertile hotbed of innovation
& entrepreneurship in their own backyard.
At the same time, we need to encourage out of the box thinking as part of our education system. Rote
learning can only get us so far. We need to ramp up coursework so that student skills remain in sync
with the rest of the market. When Stanford and other universities are teaching iPhone and Facebook app
related courses, teaching Cobol & Fortran to Indian students would be stupid in today‘s age. Students
should be encouraged to consider entrepreneurship as a viable career option. I believe this to be the
single biggest factor that could foster entrepreneurship in India. Young college graduates are at an age
when their inherent risk is at the least to becoming an entrepreneur. Educating them early enough would
also give them ample time to shape up their skills and experience that can prepare them for their
entrepreneurial journey. We also should make it easy and acceptable for students to take sabbaticals
from their degree coursework. Currently, this if frowned upon in Indian society — we should try to
make people more accepting of it.
The NEN Foundation has done a good job at increasing entrepreneurship awareness across various
campuses. However, when you take a quick peek at some of the questions that are asked by some of the
student participants, it just boggles your mind. Few are requesting ideas, several requesting funding even
before doing any analysis of the idea and several others simply leave you in sheer disbelief. One
common aspect across most of the questions is that they are looking for handholding. And I think that
really needs to change. I‘m not sure if we‘re (including mainstream media that has glamourized stories
about entrepreneurship and VC fundings) sending them the wrong signals – but if you think all

information, market research and other info will be served to you on a silver platter, then probably being
an entrepreneur is not in your best interests.
We missed out on the technology innovation bus, but if we dont really ramp up our education system
and associated R&D – innovation, we might end up sitting on the sidelines of the cleantech wagon as
well.
Lack of Good Mentors:
India does not have a large pool of successful entrepreneurs who have built global level companies and
are keen on mentoring the next generation of entrepreneurs. From a lot of entrepreneurs that I‘ve talked
to — they were more desperately seeking good mentors as opposed to funding.
We probably need someone to lead & pave the way just like what Yossi Vardi did to Israel and what NR
Murthy did to the outsourcing market in India.
Lack of M&A activity:
This I say just from the technology market. M&A is just not happening in the Indian market.
Consequently, the already existing portals, news sites get a chance to launch their own services without
any strong startup getting an opportunity to establish itself.
These are the three things that I think have the biggest impact — but then, there‘s a good chance that
you might disagree. This is a highly subjective topic and everyone has their own conviction about it. I
think when it comes to technology entrepreneurship, we should try and do a detailed case study of Israel.
The country has just a population of 7 million, hostile neighbors and high taxes. Yet it boasts of the 2nd
highest concentration of startups just after the US. They‘re definitely doing something right. And that‘s
what we should try & emulate.
IDENTIFICATION OF BUSINESS OPPORTUNITIES
Business opportunities can be obtained from various magazines, trade journals, financial institutions,
government, commercial organizations, friends, relatives, competitors etc. Choosing of best business
opportunity from the information collected requires ingenuity, skill and foresight of entrepreneur. An
entrepreneur has to identify and select the most rewarding opportunity from the available ones. For this
one has to evaluate the following areas and understand the gap between demand and supply.
Study of government rules and regulations regarding the different business opportunities.
Extensive and in depth study of promising investment opportunity.
SWOT analysis of the business opportunities.
Market feasibility study.
Technical feasibility study.
Financial feasibility study and
Social feasibility study
An opportunity can be defined as an attractive and excellent project idea which an entrepreneur searches
for and accepts such idea as a basis for his investment decision. A good business opportunity must be
capable of being converted into feasible project. Two major characteristics of business opportunity are:
good and wide market scope and an attractive, acceptable and reliable return on investment.

Sources of business ideas
1.Unfulfilled demand; An Unfulfilled demand will open doors to new products
2.Own idea: One own creative idea can result in a business opportunity.
3.Social and economic trends: Social and economic trends necessitate demand for new
products.
4.Magazines/Journals/ Research publications: Magazines/ Journals/ Research publications form a major
role of ideas.
5.Government: Government also identifies and proposes ideas and give support for business
opportunities.
6.Emerging new technology and scientific know how: commercial exploitation of indigenous and
imported technologies and know-how is another source of opportunities. 7.Charges in consumer needs:
the needs of consumers charge giving rise to requirement of new business opportunities.
8.Trade fairs/Exhibitions: Trade fairs and technical exhibitions also offer wide scope
for business opportunities.
9.Banks and government agencies: Commercial banks and government agencies
encourage entrepreneurs by providing business opportunities, ideas subsidies, loan etc.
MARKET FEASIBILITY STUDY
Feasibility study is a detailed work of collection of data analysis and concludes the
feasibility of that operation. Market feasibility study involves the study and analysis of the following
aspects. Market feasibility study will assess whether the product has good market. This needs to study
the following:
Nature of market: The nature of market in terms of monopolistic or perfect competition is to be
studied.
Cost of production: It is essential to study and control cost of production. Cost of production decides
the selling price.
Selling price and profit: Selling price plays a vital role in profit. In price sensitive goods like
cosmetics, one should be careful in fixing the price.
Demand: Present demand and demand forecast are prepared and studied. This will decide the facility
planning.
Market share: Estimated market share is to be made. Comparison is made with share of
similar products.
Target market: Study is made with regard to the target market and market segmentation.
TECHNICAL FEASIBILITY STUDY
In technical feasibility study, the following points are studied.
Location of the project: The data regarding the location of project is very important. It may be located in
rural, urban or semi- urban areas.
Construction of factory, building and its size: The construction details, the nature/type of building and
its size for the project are to be analyzed.
Availability of raw materials: The study of availability of raw materials, sosurces of supply, alternate
sources, its quality and specifications cost etc., are to be studied. Selection of machinery: The selection
of machinery required to produced the intended product is to be carried out. The specifications are

capacity, cost sources of supply, technology evaluation of various makes of the machine. Their good and
bad etc., are studied
Utilities: The details about availability of utilities like water, gas electricity, petrol, diesel etc. are to be
studied.
Production capacity: Establishment off production capacity and utilization of production capacity are
analyzed.
Staff requirement: Study and analysis of requireme nt of workers, technical staff and officers etc. is to be
made.
Technical viability: The technical viability of the opportunity is to be studied.
FINANCIAL FEASIBILITY STUDY
Financial feasibility is the most important aspect of a business opportunity. So me of the aspects
involved in financial feasibility study are:
Total capital cost of project: It is very essential to study the total cost of project. This includes fixed
capital, working capital and interest factor.
Sources of capital: The study of main sources of capital is to be made. If capital is borrowed, interest
burden is to be studied in detail.
Subsidiary sources for additional finance: After study of main sources of capital, subsidiary sources
of capital are to be identified and studied.
Financial for future development of business: Financial requirement for future development of
business are to be studied. Working capital requirement for at least three months running of enterprise
are to be estimated.
Break Even Analysis(BEA): BEA is to be carried out to see at what level of production/sales will make
the organization no loss/no profit situation. BEA is very useful to identify the level of production that
makes profit.
Estimation of cash and fund flow: It is very essential to make a study of estimation of cash and fund
flow in the business.
Return on investment (ROI): ROI is to be calculated to see the amount of return on investment for the
investors/share holders and how much they get.
Proposed balance sheet: Proposed balance sheet is made showing liabilities and assets, depreciation,
interest burden, profits expected etc.
Cost of labor and technology: The cost of employees is to be estimated and studied. If technology is
not available then it has to be purchased from any R & D institution or by way of foreign collaboration.
SOCIAL FEASIBILITY STUDY
Social feasibility study is important in the social environment.
• Location: The location is in such a place that it should not have objection from the neighbors.
• Social problem: The enterprise should not create any nuisance to the public.
• Pollution: There should not have any sort of noise or other pollution objectionable society. Suitable
measures are to be taken for controlling pollution.
• Other problem: Any other problems related to the society and people are to be studied.

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