Post on 08-Nov-2014
Entrepreneurship notes III semester MBA
Unit I
What Is Entrepreneurship?
Entrepreneurship can be defined by describing what entrepreneurs do. For
example: "Entrepreneurs use personal initiative, and engage in calculated risk-
taking, to create new business ventures by raising resources to apply innovative
new ideas that solve problems, meet challenges, or satisfy the needs of a clearly
defined market."
But as the following definitions state, entrepreneurship is not restricted to
business and profit:
"Entrepreneurship involves bringing about change to achieve some benefit. This
benefit may be financial but it also involves the satisfaction of knowing you have
changed something for the better.
"Entrepreneurship is essentially the act of creation requiring the ability to
recognize an opportunity, shape a goal, and take advantage of a situation.
Entrepreneurs plan, persuade, raise resources, and give birth to new ventures."
Who Are Entrepreneurs?
The word „Entrepreneur‟ has been taken from the French word. It means
Between Takers.
Entrepreneur is another name of Risk Taker.
An entrepreneur is an individual who takes moderate risks and brings innovation.
Entrepreneur is a person who organises/ manages the risks in his/her enterprise.
“Entrepreneur is a individual who takes risks and starts something new”
Definition
According to J.B.say, “Entrepreneur is an Economic agent to unites all the means
of production”
An entrepreneur is an individual who takes moderate risks and brings innovation.
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An entrepreneur is a person who has possession of a new enterprise, venture or
idea and assumes significant accountability for the inherent risks and the
outcome.
An entrepreneur is "one who undertakes an enterprise, especially a contractor,
acting as intermediately between capital and labour."
Characteristics of Successful Entrepreneurs
Entrepreneurs are different from each other, but successful entrepreneurs tend to
share certain characteristics. Not all of them have developed each of the
following to the same degree, but they tend to have developed most of them to
some degree. Here are some common characteristics of successful
entrepreneurs.
Entrepreneurs tend to:
be passionate about achieving their goals
have a spirit of adventure (in fact, the word "adventure" is derived from the
Latin word meaning "to venture")
have a strong need to achieve and seek personal accomplishment
be self-confident and self-reliant
be goal-oriented
be innovative, creative, and versatile
be persistent
be hardworking and energetic
have a positive attitude
be willing to take initiative
have a strong sense of commitment
An eye for opportunity: Many entrepreneurs start by finding a need and quickly
satisfying it.
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Independence: Even though most entrepreneurs know how to work within the
framework for the sake of profits, they enjoy being their own boss.
An appetite for hard work: Most entrepreneurs start out working long, hard
hours with little pay.
Self-confidence: Entrepreneurs must demonstrate extreme self-confidence in
order to cope with all the risks of operating their own business.
Discipline: Successful entrepreneurs resist the temptation to do what is
unimportant or the easiest but have the ability to think through to what is the most
essential.
Judgment: Successful entrepreneurs have the ability to think quickly and make
a wise decision.
Ability to accept change: Change occurs frequently when you own your own
business, the entrepreneur thrives on changes and their businesses grow.
Make stress work for them: On the roller coaster to business success the
entrepreneur often copes by focusing on the end result and not the process of
getting there.
Need to achieve: Although they keep an "eye" on profits, this is often
secondary to the drive toward personal success.
Focus on profits: Successful entrepreneurs always have the profit margin in
sight and know that their business success is measured by profits. Is this your
profile or would you rather do your job, pick up your paycheck and leave the
headaches to someone else? Most of us, quite easily, choose the later.
Entrepreneurship as a Career.
Positive aspects of entrepreneurship
Being the boss if his own business, he enjoys unlimited powers. He can do
things in his own way and he need not take orders from someone else. He can
make his own decisions and act on them.
There are numerous opportunities for his self- development.
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Working on one‟s own and thus getting rewards yields immense satisfaction
and pleasure for more than what he can get in a job.
Monetary rewards can be more than commensurate with his capacity and
capabilities.
He can command deference and respect of his immediate family and friends. It
is a kind of intangible reward.
Instead of depending on others, he generates employment for others.
He can make significant contribution to the development of the country and be
proud of taking part in nation building activities.
He can be a great achiever realising his goals and proving his achievements to
the world. He can be recognised for his outstanding efforts.
Negative aspects
Though an entrepreneur is his own boss, in some respects he is not. It is so
because he is constrained by various people like his financiers, labourers,
suppliers, customers and so on.
He may have to face frustration since the scope of his operations is limited by
his limited resources.
He has to work long and hard hours from morning to dusk and his venture
tends to absorb all his energy and time. This may affect his social and family life.
At times he may have to face disappointments and frustrations since
everything in his venture may not always work the way he would like it to.
He has to always work with tension since there is always the risk of failure.
7 key Qualities of Entrepreneur
Being an entrepreneur is about more than just starting a business or two, it is
about having attitude and the drive to succeed in business. All successful
Entrepreneurs have a similar way of thinking and posses several key personal
qualities that make them so successful in business. Successful entrepreneurs
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like the ambitious Richard Branson have an inner drive to succeed and grow their
business, rather than having a Harvard Business degree or technical
knowledge in a particular field.
All successful entrepreneurs have the following qualities:
Inner Drive to Succeed
Entrepreneurs are driven to succeed and expand their business. They see the
bigger picture and are often very ambitious. Entrepreneurs set massive goals for
themselves and stay committed to achieving them regardless of the obstacles
that get in the way.
Strong Belief in themselves
Successful entrepreneurs have a healthy opinion of themselves and often have a
strong and assertive personality. They are focused and determined to achieve
their goals and believe completely in their ability to achieve them. Their self
optimism can often been seen by others as flamboyance or arrogance but
entrepreneurs are just too focused to spend too much time thinking about un-
constructive criticism.
Search for New Ideas and Innovation
All entrepreneurs have a passionate desire to do things better and to improve
their products or service. They are constantly looking for ways to improve.
They're creative, innovative and resourceful.
Openness to Change
If something is not working for them they simply change. Entrepreneurs know the
importance of keeping on top of their industry and the only way to being number
one is to evolve and change with the times. They're up to date with the latest
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technology or service techniques and are always ready to change if they see a
new opportunity arise.
Competitive by Nature
Successful entrepreneurs thrive on competition. The only way to reach their
goals and live up to their self imposed high standards is to compete with other
successful businesses.
Highly Motivated and Energetic
Entrepreneurs are always on the move, full of energy and highly motivated. They
are driven to succeed and have an abundance of self motivation. The high
standards and ambition of many entrepreneurs demand that they have to be
motivated!
Accepting of Constructive Criticism and Rejection
Innovative entrepreneurs are often at the forefront of their industry so they hear
the words "it can't be done" quite a bit. They readjust their path if the criticism is
constructive and useful to their overall plan, otherwise they will simply disregard
the comments as pessimism. Also, the best entrepreneurs know that rejection
and obstacles are a part of any leading business and they deal with them
appropriately.
Factors affecting Entrepreneurship growth:
1. Economic factors
2. Social factors
3. Cultural factors
4. Personality factors
Economic Factors:
Lack of adequate basic facilities
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Non- availability of capital
Non- availability of raw materials and finished goods.
Greater risk involved in business
Non- availability of skilled labour
Social factors
Customs and traditions
Rationality of the society
Social system
Social set-up
Personality Factors
Suspect personality
Emergence of planning
Role of entrepreneur in economic development
1)Employment Generation
Growing unemployment particularly educated unemployment is the problem of
the nation. The available employment opportunities can cater only 5 to 10 % of
the unemployed. Entrepreneurs generate employment both directly and
indirectly. Directly, self employment as an entrepreneur and indirectly by starting
many industrial units they offer jobs to millions. Thus entrepreneurship is the best
way to fight the evil of unemployment.
2) National Income
National Income consists of the goods and services produced in the country and
imported. The goods and services produced are for consumption within the
country as well as to meet the demand of exports. The domestic demand
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increases with increase in population and increase in standard of living. The
export demand also increases to meet the needs of growing imports due to
various reasons. An increasing number of entrepreneurs are required to meet
this increasing demand for goods and services. Thus entrepreneurship
increases the national income.
3) Balanced Regional Development
The growth of Industry and business leads to a lot of Public benefits like transport
facilities, health, education, entertainment etc. When the industries are
concentrated in selected cities, development gets limited to these cities. A rapid
development . When the new entrepreneurs grow at a faster rate, in view of
increasing competition in and around cities, they are forced to set up their
enterprises in the smaller towns away from big cities. This helps in the
development of backward regions.
4) Dispersal of economic power
Industrial development normally may lead to concentration of economic powers
in a few hands. This concentration of power in a few hands has its own evils in
the form of monopolies. Developing a large number of entrepreneurs helps in
dispersing the economic power amongst the population by weakening the
harmful effects of monopoly.
5) Better standards of living
Entrepreneurs play a vital role in achieving a higher rate of economic growth.
Entrepreneurs are able to produce goods at lower cost and supply quality goods
at lower price to the community according to their requirements. When the price
of the commodities decreases the consumers get the power to buy more goods
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for their satisfaction. In this way they can increase the standard of living of the
people.
6) Creating innovation
An entrepreneur is a person who always looks for changes. apart from combining
the factors of production, he also introduces new ideas and new combination of
factors. He always try to introduce newer and newer technique of production of
goods and services. An entrepreneur brings economic development through
innovation.
7) Capital formation
Entrepreneurship promotes capital formation by mobilizing the idle saving of the
public and put it under continues transaction so as to improve the value of the
capital by utilizing in a profitable way under different stages of enterprise.
8) resource mobilization
The natural resources including the human resource skill can be effectively
utilized for functioning of an enterprise towards economic development which
might otherwise remain unutilized and idle.
9) backward and forward linkages
Entrepreneurship will give the opportunity for the people to involve at different
levels starting from production to ultimate consumption, the backward and
forward linkages which stimulate the process of economic development in the
country.
10) promotes country’s export trade
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Last but no means the least, it also promotes country’s export trade i.e., an
important ingredient to economic development.
Classification of entrepreneurship
A. Clarence Danhof Classification:
Clarence Danhof classifies entrepreneurs into four types.
1. Innovative: Innovative entrepreneur is one who assembles and synthesis
information and introduces new combinations of factors of production. They are
characterized by the smell of innovativeness. These entrepreneurs sense the
opportunities for introduction new ideas new technology, new markets and
creating new organizations. Innovative entrepreneurs are very much helpful for
their country because they bring about a transformation in life style.
2. Imitative/ Adoptive: Imitative entrepreneur is also known as adoptive
entrepreneur. He simply adopts successful innovation introduced by other
innovators. These entrepreneurs imitate the existing entrepreneurs and setup
their enterprise in the same manner. Instead of innovating, they just imitate the
technology and methods innovated by others. These entrepreneurs are very
helpful in less developed countries as they contribute significantly in the growth
of enterprise and entrepreneurial culture in these countries. Further by adopting
the technology, which is already tested, they generate ample employment
avenues for the youth and therefore they are treated as
agent of economic development.
3. Fabian: The Fabian entrepreneur is timid and cautious. He imitates other
innovations only if he is certain that failure to do so may damage his business.
They are very much skeptical in their approach in adopting or innovating new
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technology in their enterprise. They are not adaptable to the changing
environment. They love to remain in the existing business with the age-old
techniques of production. They only adopt the new technology when they realize
that failure to adopt will lead to loss or collapse of the enterprise.
4. Drone: These entrepreneurs are conservative or orthodox in outlook. They
never like to get rid of their traditional business and traditional machinery or
systems of the business. They always feel comfortable with their old fashioned
technology of production even though the environment as well as the society
have undergone considerable changes. Thus, drone entrepreneurs refuse to
adopt the changes. They are laggards as they continue to operate in their
traditional way and resist changes. His entrepreneurial activity may be restricted
to just one or two innovations. They refuse to adopt changes in production even
at the risk of reduced returns
B. Arthur H. Cole Classification:
Arthur H. Cole classifies entrepreneurs as
1. Empirical: He is an entrepreneur hardly introduces anything revolutionary
and follows the principle of rule of thumb.
2. Rational: The rational entrepreneur is well informed about the general
economic conditions and introduces changes which look more revolutionary.
3. Cognitive: Cognitive entrepreneur is well informed, draws upon the advice
and services of experts and introduces changes that reflect complete break from
the existing scheme of enterprise.
C. Classification on the Basis of Ownership:
1.Private: Private entrepreneur is motivated by profit and it would not enter those
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sectors of the economy in which prospects of monetary rewards are not very
bright.
2. Public: In the underdeveloped countries government will take the initiative to
share enterprises.
D. Classification Based on the Scale of Enterprise:
1. Small scale: This classification is especially popular in the underdeveloped
countries. Small entrepreneurs do not posses the necessary talents and
resources to
initiate large scale production and introduce revolutionary technological changes.
2. Large scale: In the developed countries most entrepreneurs deal with large
scale enterprises. They posses the financial and necessary enterprise to initiate
and introduce new technical changes. The result is the developed countries are
able to sustain and develop a high level of technical progress.
In recent years, some new classifications have been made regarding
entrepreneurs, which are discussed further.
1. Solo operators: These entrepreneurs prefer to set up their business
individually. They introduce their own capital, intellect and business acumen to
run the enterprise successfully They operate their business mainly in the form of
proprietorship type of concern.
2. Active partners: Entrepreneurs of this type jointly put their efforts to build
enterprise pooling together their own resources. They actively participate in
managing the daily routine of the business concern. As such, the business
houses or the firms which are
managed by the active partners become more successful in their operation.
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3. Inventors: These entrepreneurs primarily involve themselves in Research and
Development (R and D) activities. They are creative in character and feel happy
in inventing new products, technologies and methods of production
4. Challengers: Entrepreneurs of this type take challenges to establish business
venture as mark of achievement. They keep on improving their standard and face
boldly the odds and adversities that come in their way. They use their business
acumen and talent to convert the odds into opportunities thereby making profit.
According to them, if there is no challenge in life, there is no charm in life.
Challenges make them bold, and thus, they never hesitate to plunge themselves
into uncertainties for earning profit.
5. Buyers (entrepreneurs): These entrepreneurs explore opportunities to
purchase the existing units which may be seized or are in running condition. If
the units they purchase are sick they turn them around using their experiences,
expertise and business acumen. By purchasing these units they make
themselves free from the hassles of building infrastructures and other facilities.
Unit 2
EDPs – Entrepreneurship Development Programmes
Objective of EDPs
Develop and strength their entrepreneurial quality.
Analysis environmental set up relating to small industry and small business.
Select productEinstein College of Engineering
Formulate project for the product
Know pros and cons in becoming an entrepreneurs
Develop a broad vision about the business.
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Course contents and curriculum of EDPs
1. General instruction to Entrepreneurship
2. Motivation Training
3. Management Skills
4. Support system and procedure
5. Fundamentals of project feasibility study
6. Plant visits
Phases of EDPs
1) Pre- training Phase
a) Selection of entrepreneurs
b) Arrangement of infrastructure
c) Tie-up of guest faculty for the training purpose. Like that
2) Training Phase
a) Purpose of training is to develop „need for achievement‟
b) Role play as like entrepreneur
3) Post-training Phases
a) Follow- up
b) Review the pre- training work
c) Review the process of training programmes and
d) Review past training approach
ACTION PLAN:
Proper planning and execution are required at all levels. Proper training in
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right direction is to be planned meticulously. The steps to be taken can be listed
as follows:
Identifying entrepreneurs with different literary levels in proper groups and to
create awareness about entrepreneurship and its importance as job providing
avenues rather than job seeking ventures.
Skills to be provided to selected group are to be identified.
Making them to realise the income generation and social status and
recognition.
Giving orientation and skill training on selected trades on their choice and
suitability
Assisting them in preparation of project reports for their own proposed units and
helping them to follow up the venture to start the new enterprise.
Providing consultancy and guidance, continuously
A training capsule of around 15 days may be provided by expert institutions,
voluntary agencies and Govt., departments. The financial resources are to be
mobilised to provide this type of programmes, by the government organizations
like banks, public sector organizations and voluntary agencies...
The higher education institutions, which are spreading throughout the country,
may conduct programmes like this, regularly in addition to their academic
programmes, with or without govt., aid.
Young graduates of that area and the final year students of U.G/P.G courses
may also be provided with such training. Normally, infrastructures are available
with such institutions. Getting expertise and mobilizing other requirements will
also be easier for such institutions, since they are already having good
establishment facilities.
Voluntary agencies like Rotary clubs, Lions clubs, and etc. Govt., sponsored
institutions like UGC, Science and technology Councils may interact with the
colleges/universities, through financial assistance, to carry out the programmes.
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With proper financial assistance and effectively using them, each
college/university may train 300 to 1000 youths, in the area of entrepreneurship
development. When women are going to be the target groups, the benefit will
reach a larger section of the society.
Thus ED culture is to be developed gradually among the prospective individuals,
in addition to providing educational facilities to use the vibrant individual force in
right direction. Thus programmes combining, technical skill and entrepreneurship
skill, to selected groups, will make the Indian people more self reliant and
confident and would lead them to be envied by people at the international level.
TRAINING COMPONENTS:
Even though there are very efficient institutions at the national level, like EDI
Ahmadabad, NSTED BOARD, New Delhi, NISIE, Hyderabad and at State level,
CED in Madurai and Chennai, TANSTIA in Chennai such programmes are to be
conducted at regional level, at the residential area of the women, in their
vernacular language and to the specific requirement of the people of that area.
The essential components of such training may be listed as follows.
1. Awareness, career building and attitudinal change towards enterprise
formation.
2. Effective training on building up self-confidence and communication skills.
3. Skill training on specific trades suitable to their option.
4. Training on quick and effective decision making techniques and managerial
skills.
5. Training on marketing strategies.
6. Training on effective financial management.
7. Training on project formulation and implementation.
8. Scope for increasing access to new technologies and scientific knowledge.
9. Information on persons/offices to be contacted.
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10. Interaction with successful entrepreneurs for sharing their experiences
Unit 3
Financial Institutions:
Commercial banks
IDBI
IFCI
ICICI
LIC
UTI
SFCs
SIDBI
EXIM BANK
Support Institutions
NSIC
SIDO
SSIB
SSIDC
SISIs
DICS
INDUSTRIAL ESTATES
Entrepreneurial Initiatives in India- “Top Incubation Center”
1.Centre for Innovation, Incubation& Entrepreneurship (CIIE) - IIM Ahmedabad
Set up in 2001
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Since inception CIIE has 15-odd innovations grow out of the incubation centre
in varied technologies
2. Society for Innovation and Entrepreneurship (SINE)- IIT Bombay
Set up in 2004
It currently has 16 companies under its incubation programme
3. Cell for Tech Innovation, Development & entrepreneurship support- IIT
Chennai
Set up in 2000
Organises national level competitions, „Breakthrough‟ (general business plan
competition) and „Genesis‟ (social entrepreneurship plan competition)
4. Society for Innovation and Development (SID) - IISc, Bangalore
Set up in 2006
The investigator is given a seed capital for Rs 20 lakh a year for two years as
soft loan for the approved plan
5. The SP Jain Centre for Entrepreneurship Development- SPJIMR
16-week 'Start Your Own Business' programme-a public programme held
every six months.
6. Technology Business Incubator (TBI) - BITS Pilani
In association with DST, BITS has established Technology Business Incubator
in the area of embedded systems and VLSI design back in 2004
So far, TBI has helped spawn ten companies.
7. Technology Incubation and Entrepreneurial Training Society (TIETS) – IIT
Kharagpur
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Set up in 2005, So far, the institute has been able to incubate two companies
through „Concipio‟ over the last three years. Besides, an in house panel has
helped 11-12 ventures take wing
8. Nirma Labs, Nirma University, Ahmedabad
Established in 2004, Nirma Labs used to pride itself in a three-step model for
students who were interested to start their own businesses-training, incubation
and funding.
Entrepreneurial Initiatives in India- “Government and Non Government Support”
Delhi Technical University announced the setting up of water technology and
management centre with the support of UNESCO.
The Entrepreneurship Development Cell (EDC) of University School of
management Studies, Guru Gobind Singh Indraprastha University (GGSIPU) has
launched a one month business skill development programme in association with
the Ministry of Micro, Small and Medium Enterprises. Representatives from
KVIC, NABARD will share their knowledge.
What is a Micro, Small or Medium Enterprise?
The earlier concept of „Industries‟ has been changed to „Enterprises‟
• Enterprises have been classified broadly into:
(i) Enterprises engaged in the Manufacture / production of Goods
pertaining to any industry; &
(ii) Enterprises engaged in providing / Rendering of services.
Manufacturing enterprises have been defined in terms of investment in plant
and machinery
(excluding land & buildings) and further classified into :
- Micro Enterprises - investment up to Rs.25 lakh.
- Small Enterprises - investment above Rs.25 lakh & up to Rs. 5 crore
- Medium Enterprises - investment above Rs. 5 crore & up to Rs.10 crore.
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• Service enterprises have been defined in terms of their
investment in equipment (excluding land & buildings) and further
classified into:
- Micro Enterprises – investment up to Rs.10 lakh.
- Small Enterprises – investment above Rs.10 lakh & up to Rs.2 crore.
- Medium Enterprises–investment above Rs. 2 crore & up to Rs. 5 crore
It is not necessary to engage in manufacturing activity for self-employment. One
can set up service enterprises as well
THE ROLE OF GOVERNMENT IN SUPPORTING ENTREPRENEURSHIP
Small and Medium-sized Enterprises (SMEs) in market economies are the
engine of economic development. Owing to their private ownership,
entrepreneurial spirit, their flexibility and adaptability as well as their potential to
react to challenges and changing environments, SMEs contribute to
sustainable growth and employment generation in a significant manner.
SMEs have strategic importance for each national economy due a wide range of
reasons. Logically, the government shows such an interest in supporting
entrepreneurship and SMEs. There is no simpler way to create new job positions,
increasing GDP and rising standard of population than supporting
entrepreneurship and encouraging and supporting people who dare to start their
own business. Every surviving and successful business means new jobs and
growth of GDP.
Therefore, designing a comprehensive, coherent and consistent approach of
Council of Ministers and entity governments to entrepreneurship and SMEs in the
form of government support strategy to entrepreneurship and SMEs is an
absolute priority. A comprehensive government approach to
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entrepreneurship and SMEs would provide for a full coordination of activities of
numerous governmental institutions (chambers of commerce, employment
bureaus, etc.) and NGOs dealing with entrepreneurship and SMEs. With no
pretension of defining the role of government in supporting
entrepreneurship and SMEs, we believe that apart from designing a
comprehensive entrepreneurship and SMEs strategy, the development of
national SME support institutions and networks is one of key condition for
success. There are no doubts that governments should create different types of
support institutions:
i) To provide information on regulations, standards, taxation, customs duties,
marketing issues;
ii) To advise on business planning, marketing and accountancy, quality control
and assurance;
iii) To create incubator units providing the space and infrastructure for business
beginners and innovative companies, and helping them to solve technological
problems, and to search for know-how and promote innovation; and
iv) To help in looking for partners. In order to stimulate entrepreneurship and
improve the business environment for small enterprises.
Training
Basic training differs from product to product but will necessary involve
sharpening of entrepreneurial skills. Need based technical training is provided by
the Govt. & State Govt. technical Institutions.
There are a number of Government organisations as well as NGOs who conduct
EDPs and MDPs. These EDPs and MDPs and are conducted by MSME's,
NIESBUD, NSIC, IIE, NISIET, Entrepreneurship Development Institutes and
other state government developmental agencies.
Marketing Assistance
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There are Governmental and non-governmental specialised agencies which
provide marketing assistance. Besides promotion of MSME products through
exhibitions, NSIC directly market the MSME produce in the domestic and
overseas market. NSIC also manages a single point registration
scheme for manufacturers for Govt. purchase. Units registered under this
scheme get the benefits of free tender documents and exemption from earnest
money deposit and performance guarantee.
Promotional Schemes
Government accords the highest preference to development of MSME by framing
and implementing suitable policies and promotional schemes. Besides providing
developed land and sheds to the entrepreneurs on actual cost basis with
appropriate infrastructure, special schemes have been designed
for specific purposes like quality upgradation, common facilities,
entrepreneurship development and consultancy services at nominal charges.
Government of India has been executing the incentive scheme for providing
reimbursement of charges for acquiring ISO 9000 certification to the extent of
75% of the cost subject to a maximum of Rs. 75,000/- in each case. ISO 9000 is
a mechanism to facilitate adoption of consistent management practices and
production technique as decided by the entrepreneur himself.
Concession on Excise Duty
MSME units with a turnover of Rs. 1 crore or less per year have been exempted
from payment of Excise Duty. Moreover there is a general scheme of excise
exemption for MSME brought out by the Ministry of Finance which covers most of
the items. Under this, units having turnover of less than Rs. 3 crores are eligible
for concessional rate of Excise Duty. Moreover, there is an exemption from
Excise Duty for MSME units producing branded goods in rural areas
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Credit Facility to MSME
Credit to micro, small and medium scale sector has been covered under priority
sector lending by banks. Small Industries Development Bank of India (SIDBI) has
been established as the apex institution for financing the MSME. Specific
schemes have been designed for implementation through SIDBI, SFCs,
Scheduled Banks, SIDCs and NSIC etc. Loans upto Rs. 5 lakhs are made
available by the banks without insisting on collaterals. Further Credit Guarantee
Fund for micro, small and medium enterprises has been set up to provide
guarantee for loans to MSME up to Rs. 25 lakhs extended by Commercial Banks
and some Regional Rural Bank.
Policies And Schemes For Promotion Of MSME Implemented By State
Governments
All the State Governments provide technical and other support services to small
units through their Directorates of Industries, and District Industries Centres.
Although the details of the scheme vary from state to state, the following are the
common areas of support.
1. Development and management of industrial estates
2. Suspension/deferment of Sales Tax
3. Power subsidies
4. Capital investment subsidies for new units set up in a particular district
5. Seed Capital/Margin Money Assistance Scheme
6. Priority in allotment of power connection, water connection.
7. Consultancy and technical support
Government of India runs a scheme for giving National Awards to micro, small
and medium scale entrepreneurs providing quality products in 11 selected
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industry groups of consumer interest. The winners are given trophy, certificate
and a cash price of Rs. 25000/- each.
Government accords the highest preference to development of MSME by
framing and implementing suitable policies and promotional schemes like policies
and promotional schemes, providing incentives for quality upgradation,
concession on excise duty and provides technical supportive
services. Thus Government play supportive role in developing entrepreneurs
INCENTIVES FOR SETTING UP BUSINESS IN BACKWARD AREAS
The Government of India as well as several State Governments provides several
benefits and incentives to promote industrialization of backward areas. Both the
central and state governments share the cost of some of the incentives
provided. The purposes of such incentives are to develop backward areas and
increase employment for local inhabitants of such areas.
The bulk of new industries prefer areas with an established infrastructure and this
is why incentives are offered to entice new ventures to start up in areas that need
development. Incentives offered depend on the specific area chosen.
Some of the incentives offered are:
Transportation subsidies to promote industries in areas that are not easily
accessible, like remote hilly areas. A subsidy of 50% to 90% on transportation
costs is available under this scheme.
A Subsidy at the rate of 15% of the investment amount in plant and machinery
is given under the capital investment subsidy scheme.
A subsidy for interest relief is also provided at a rate of 3% for new industrial
units in some areas.
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While in the past setting up an industry in India was not an easy task because of
bureaucratic requirements that needed to be fulfilled. However both the central
and state governments have now made efforts to improve some things.
Industrial Unit Startup Information for NRIs
For Non Resident Indians returning to India to start up industrial units. They will
find that there is plenty of talent available in India. Hiring the right kind of person
can make things quite easy to go through the maze of Indian regulations.
While the government no doubt is trying to bring out reforms to make things
easier for foreign investors, the attitude of some officials is difficult to change.
Those who encounter problems should use the several channels available now
to report clerks use delaying tactics for personal gain.
Returning NRI's who can tolerate the initial adjustment setbacks in establishing
themselves when they return to India will ultimately find the rewards well worth
the effort. India offers investors tremendous opportunities and is presently one of
the most sought locations for industrial investment.
Unit 4
Institutional support to entrepreneurs
NATIONAL SMALL INDUSTRIES CORPORATION (NSIC)
The National Small Industries Corporation (NSIC), an enterprise under the union
ministry of industries was set up in 1955 in New Delhi to promote aid and
facilitate the growth of small scale industries in the country. NSIC offers a
package of assistance for the benefit of small–scale enterprises.
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1. Single point registration: Registration under this scheme for participating in
government and public sector undertaking tenders.
2. Information service: NSIC continuously gets updated with the latest specific
information on business leads, technology and policy issues.
3. Raw material assistance: NSIC fulfils raw material requirements of small-scale
industries and provides raw material on convenient and flexible terms.
4. Meeting credit needs of SSI: NSIC facilitate sanctions of term loan and
working capital credit limit of small enterprise from banks.
5. Performance and credit rating: NSIC gives credit rating by international
agencies subsidized for small enterprises up to 75% to get better credit terms
from banks and export orders from foreign buyers.
SMALL INDUSTRIES DEVELOPMENT ORGANIZATION (SIDO)
SIDO is created for development of various small scale units in different areas.
SIDO is a subordinate office of department of SSI and ARI. It is a nodal agency
for identifying the needs of SSI units coordinating and monitoring the policies and
programmes for promotion of the small industries. It undertakes various
programmes of training, consultancy, evaluation for needs of SSI and
development of industrial estates. All these functions are taken care with 27
offices, 31 SISI (Small Industries Service Institute) 31 extension centers of SISI
and 7 centers related to production and process development.
The activities of SIDO are divided into three categories as follows:
(a) Coordination activities of SIDO:
(1) To coordinate various programmes and policies of various state governments
pertaining to small industries.
(2) To maintain relation with central industry ministry, planning commission,
state level industries ministry and financial institutions.
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(3) Implement and coordinate in the development of industrial estates.
(b) Industrial development activities of SIDO:
(1) Develop import substitutions for components and products based on the
data available for various volumes-wise and value-wise imports.
(2) To give essential support and guidance for the development of ancillary
units.
(3) To provide guidance to SSI units in terms of costing market competition
and to encourage them to participate in the government stores and purchase
tenders.
(4) To recommend the central government for reserving certain items to
produce at SSI level only.
(c) Management activities of SIDO:
(1) To provide training, development and consultancy services to SSI to
develop their competitive strength.
(2) To provide marketing assistance to various SSI units.
(3) To assist SSI units in selection of plant and machinery, location, layout
design and appropriate process.
(4) To help them get updated in various information related to the small-scale
industries activities
SMALL INDUSTRIES SERVICE INSTITUTES (SISI)
The small industries service institutes have been set up in state capitals and
other places all over the country to provide consultancy and training to small
entrepreneurs both existing and prospective.
The main functions of SISI include:
(1) To serve as interface between central and state government.
(2) To render technical support services.
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(3) To conduct entrepreneurship development programmes.
(4) To initiate promotional programmes.
The SISIs also render assistance in the following areas:
(1) Economic consultancy/information/EDP consultancy.
(2) Trade and market information.
(3) Project profiles.
(4) State industrial potential surveys.
(5) District industrial potential surveys.
(6) Modernization and in plant studies.
(7) Workshop facilities.
(8) Training in various trade/activities.
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)
For ensuring larger flow of financial and non-financial assistance to the small
scale sector, the government of India set up the Small Industries Development
Bank of India (SIDBI) under Special Act of Parliament in 1989 as a wholly owned
subsidiary of the IDBI. The SIDBI has taken over the outstanding portfolio of the
IDBI relating to the small scale sector.
The important functions of IDBI are as follows:
(1) To initiate steps for technological upgradation and modernization of existing
units.
(2) To expand the channels for marketing the products of SSI sector in domestic
and international markets.
(3) To promote employment oriented industries especially in semi-urban areas to
create more employment opportunities and thereby checking migration of
people to urban areas.
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The SIDBIs financial assistance to SSIs is channeled through existing credit
delivery system comprising state financial corporations, state industrial
development corporations, commercial banks and regional rural banks.
In 2010-11 it has introduced two new schemes. The first is equipment finance
scheme for providing direct finance to existing well-run small-scale units taking
up technology upgradation/modernization and refinance for resettlement of
voluntarily retired workers of NTC.
The other new scheme was venture capital fund exclusively for small-scale
units, with an initial corpus of Rs 10 crore. SIDBI also provides financial support
to national small industries corporation (NSIC) for providing leasing, hire-
purchase and marketing support to the industrial units in the small scale sector.
EXIM bank
The Export-Import Bank of India, set up in 1982, for the purpose of financing
facilitating and promoting foreign trade of India, is the principal financial institution
in the country for coordinating working of institutions engaged in financing
exports and imports.
The Exim bank is fully owned by the Government of India and is managed by a
Board of Directors with representation from Government, financial institutions,
bank and business community. The operations are grouped into Project Finance.
Trade Finance and Overseas Investment Finance, supported by Planning and
Co-ordination Groups.
Objectives and Functions:
The objectives and functions of the Exim Bank include the following:
1. Grant of loans and advances in India solely or jointly with commercial banks to
persons exporting or intending to export India goods which may include the
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export of turnkey projects and civil consultancy services.
2. Grant of lines credit to Governments, financial institutions and other suitable
organizations in foreign countries to enable person outside India to import from
India, goods including turnkey projects, civil construction contracts and other
services including consultancy services.
3. Handling transaction where a mix of government credit and commercial credit
for exports is involved.
4. Purchasing, discounting and negotiating export bills.
5. Selling or discounting export bills in international markets.
6. Discounting of export bills negotiated or purchased by a scheduled bank or
financial institution notified by government, or granting loans and advances
against such bills.
7. Providing refinance facilities to specified financial institutions against credits
extended by them for specified exports or imports.
8. Granting loans and advances or issuing guarantees solely or jointly with a
commercial bank for the import of goods and services from abroad.
9. Issuing confirmation/endorsing letters of credit on behalf of exporters in India,
negotiating, collecting bills under letters of credit, opening letters of credit on
behalf of importers of goods is services and negotiating documents received
there under.
10. Buying and selling foreign exchange and performing such other functions of
an authorized dealer as may necessary for the functions of an export- import
bank.
11. Undertaking and financing research, surveys and techno-economic studies
bearing on the promotion and development of international trade.
12. Providing technical, administrative and financial assistance to any exporter in
India or any other person who intends to export goods from India for the
promotion, management or expansion of any industry with a view to developing
international trade.
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The Exim bank extends both funded and non-funded assistance for promotion of
foreign trade.
The funded assistance program of the Bank includes direct financial assistance
to exporters, rediscounting of export bills, technology and consultancy services
financing, refinancing of export credit and re-lending facility to banks abroad.
The non-funded assistance is in the form of guarantees which are in the form of
bid bonds, advance payment and performance guarantees, retention money
guarantees and guarantees for raising finance abroad.
The Exim bank participates with commercial banks in India in the issuance of
guarantees in foreign currencies on behalf of Indian exporters/contractors in
favor of overseas importers/employers and banks.
Exim Syndication facility was later introduced to attract greater participation in
export credit by commercial banks in India who are authorized dealers in foreign
exchange. Under this scheme, the Exim Bank provides funds for an export
proposal and syndicates the credit risks to commercial banks, ad the banks for
assuming the risks earn a commission of 0.5 percent annum from the Exim Bank.
The Exim bank also provides information and advisory services to enable
exporters to evaluate the international risks, export opportunities and
competitiveness. These include country studies, merchant banking services,
advice on international marketing and data to enable effective participation in
opportunities offered by projects by multilateral institutions.
Further, the bank carries out Research and Analysis on specific industry sub-
sectors with export potential international trade related subjects. These are
widely disseminated amongst exporters, academicians, industry and trade
organizations and government.
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Thus, the Exim Bank follows a three pronged strategy to promote Indian exports.
More than export finance, the Bank is engaged in export capability creation.
SIDBI
Small Industries Development Bank of India (SIDBI) was established in October
1989 and commenced its operation from April 1990 with its Head Office at
Lucknow as a development bank, exclusively for the small scale industries. It is a
central government undertaking. The prime aim of SIDBI is to promote and
develop small industries by providing them the valuable factor of production
finance. Many institutions and commercial banks supply finance, both long-term
and short-term, to small entrepreneurs. SIDBI coordinates the work of all of them.
Functions of Small Industries Development Bank of India (SIDBI):
Over the years, the scope of promotional and developmental activities of SIDBI
has been enlarged to encompass several new activities. It performs a series of
functions in collaboration with voluntary organisations, non-governmental
organisations, consultancy firms and multinational agencies to enhance the
overall performance of the small scale sector. The important functions of SIDBI
are discussed as follows:
(i) Initiates steps for technology adoption, technology exchange, transfer and
upgradation and modernisation of existing units.
(ii) SIDBI participates in the equity type of loans on soft terms, term loan, working
capital both in rupee and foreign currencies, venture capital support, and different
forms of resource support to banks and other institutions.
(iii) SIDBI facilitates timely flow of credit for both term loans and working capital
to SSI in collaboration with commercial banks.
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(iv) SIDBI enlarges marketing capabilities of the products of SSIs in both
domestic and international markets.
(v) SIDB1 directly discounts and rediscounts bills with a view to encourage bills
culture and helping the SSI units to realise their sale proceeds of capital goods /
equipments and components etc.
(vi) SIDBI promotes employment oriented industries especially in semi-urban
areas to create more employment opportunities so that rural-urban migration of
people can be checked.
Financial Assistance Scheme of SIDBI
It is the general observation that the main obstacles and problems in the growth
of industrial units are the paucity of primary infrastructure, unavailability of
suitable market for selling the products, working capital requirement and
difficulties arising out of the delays in receiving the bills. Looking to the above
problems SIDBI has included many provisions into its various schemes.
1. Loan assistance to the institutions providing market or marketing avenues to
the small entrepreneurs.
2. Loan to ancillary units and also for modernisation and upgrading technology.
3. Loan to institutions providing primary services and infrastructure and
developing the growth centres.
4. Loan assistance to NSIC.
Apart from the above loan assistance, SIDBI also serves the following:
(a) Refinance to SSIDCs which supply raw material to small units and provide
them market avenues.
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(b) Bill discounting facility
(c) Refinance for loan given by state level institutions and banks under the single
window system for fixed and working capital.
(d) Refinance of loan given to certified professionals and self-employed people
for business like small clinics and hospitals, nursing homes, development of
tourism etc.
5. Refinance for loan given by banks and concerned institutions for new projects,
expansion and modernisation of existing units, quality improvement and
rehabilitation of the units.
Similarly, SIDBI provides assistance to women entrepreneurs and ex-servicemen
under its various schemes. So in the above way SIDBI makes a good platform for
the budding entrepreneurs.
IFCI
Functions
The main functions of I.F.C.I. are as under:-
i) Granting loans and advances for the establishment, expansion, diversification
and modernisation of industries in corporate and co-operative sectors.
ii) Guaranteeing loans raised by industrial concerns in the capital market, both in
rupees and foreign currencies.
iii) Subscribing or underwriting the issue of shares and debentures by industries.
Such investment can be held up to 7 years.
iv) Guaranteeing credit purchase of capital goods, imported as well as purchased
within the country.
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v) Providing assistance, under the soft loans scheme, to selected industries such
as cement, cotton textiles, jute, engineering goods, etc
SFC
The functions of SFCs include
(1) Grant of loans and advances to or subscribe to debentures of, industrial
concerns repayable within a period not exceeding 20 years, with option of
conversion into shares or stock of the industrial concern.
(2) Guaranteeing loans raised by industrial concerns which are repayable within
a period not exceeding 20 years.
(3) Guaranteeing deferred payments due from an industrial concern for purchase
of capital goods in India.
(4) Underwriting of the issue of stock, shares, bonds or debentures by industrial
concerns.
(5) Subscribing to, or purchasing of, the stock, shares, bonds or debentures of an
industrial concern subject to a maximum of 30 percent of the subscribed capital,
or 30 percent of paid up share capital and free reserve, whichever is less.
IDBI
The IDBI has been established to perform the following functions-
(1) To grant loans and advances to IFCI, SFCs or any other financial institution
by way of refinancing of loans granted by such institutions which are repayable
within 25 year.
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(2) To grant loans and advances to scheduled banks or state co-operative banks
by way of refinancing of loans granted by such institutions which are repayable in
15 years.
(3) To grant loans and advances to IFCI, SFCs, other institutions, scheduled
banks, state co-operative banks by way of refinancing of loans granted by such
institution to industrial concerns for exports.
(4) To discount or rediscount bills of industrial concerns.
(5) To underwrite or to subscribe to shares or debentures of industrial concerns.
(6) To subscribe to or purchase stock, shares, bonds and debentures of other
financial institutions.
(7) To grant line of credit or loans and advances to other financial institutions
such as IFCI, SFCs, etc.
(8) To grant loans to any industrial concern.
(9) To guarantee deferred payment due from any industrial concern
ICICI
The primary function of ICICI is to act as a channel for providing development
finance to industry. In pursuit of its objectives of promoting industrial
development, ICICI performs the following functions:-
(i) It provides medium and long-term loans in Indian and foreign currency for
importing capital equipment and technical services. Loans sanctioned generally
go towards purchase of fixed assets like land, building and machinery;
(ii) It subscribes to new issues of shares, generally by underwriting
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them;
(iii) It guarantees loans raised from private sources including deferred
payment;
(iv) It directly subscribes to shares and debentures;
(v) It provides technical and managerial assistance to industrial units;
(vi) It provides assets on lease to industrial concerns. In other words,
assets are owned by ICICI but allowed to be used by industrial
concerns for a consideration called lease rent.
(vii) It provides project consultancy services to industrial units for new
projects.
Problems of entrepreneurs
The path of small entrepreneurs is not rosy. Small entrepreneurs face the
following types of problems:
(1) Problem of raw materials:
A major problem that the small entrepreneurs face is the procurement of raw
materials. They have to confront with numerous problems like;
i. Availability of inadequate quantity
ii. Poor quality of materials
iii. High cost of raw materials etc
All these factors adversely affect the proper functioning of small units.
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(2) Problem of finance:
Finance is one of the most important problems faced by small entrepreneurs. As
finance is the life blood of a business organization and no business organization
can function properly in the absence of adequate funds.
The problem of finance in small sector is mainly due to two reasons i.e.
(i) Scarcity of capital in the country as a whole.
(ii) Weal credit-worthiness of small units in the country. Due to their weak
economic base, they find it difficult to take financial assistance from the
commercial banks and financial institutions.
Therefore, small entrepreneurs have to obtain credit from the money lenders on
a very high rate of interest.
(3) Problem of marketing:
One of the major problems faced by small entrepreneurs is in the field of
marketing. They are not in a position to get first hand information about the
market i.e. information about completion, taste, liking disliking of consumers.
Therefore, they are not able to upgrade their products according to the changing
business environment. These small units acceding to the changing business
environment.
These small units often do not process any marketing organization. As a
consequence, their product quality compares unfavorably with the quality of the
products of the large scale industries.
Therefore, these industries suffer from a comparative disadvantage as compared
to large scale industries.
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(4) Problem of under utilization of capacity:
Most of the small entrepreneurs are suffering from the problem of under
utilization of capacity. Small scale units are making only 40 to 50 percent use of
their installed capacities due to various reasons such as shortage of finance,
raw-materials, power and under-developed markets for their products.
(5) Outdated technology:
Most of the small entrepreneurs depend upon old techniques and equipment.
These units find it very difficult to modernize their plant and machinery due to
limited capacity and capital.
He quality of products and productivity tend be low in the absence of modern
technology and that too at higher cost. They are in no position to complete with
their better equipped rivals operating modern large scale units. For example,
Khaki products even after government subsidy seem to be costlier.
(6) Poor project planning:
Poor project planning is another problem faced by small entrepreneurs. In the
absence of education and experience, these entrepreneurs do not attach much
significance to viability studies. They do not bother to study the demand aspect,
marketing problems, sources of raw materials.
Inexperienced and incompetent entrepreneurs often submit unrealistic feasibility
reports and incomplete documents which invariably result in delays in completing
promotional formalities. They cannot afford to avail services of project
consultants due to limited financial resources.
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(7) Inadequate infrastructure:
Insufficient quality and quantity of transportation, communication and other basic
services particularly in backward areas is another problem. Inadequate
infrastructure results in under utilization of capacity and wastages.
Inadequate infrastructures also adversely affect the quality, quantity and
production schedule of the enterprises operating in these areas. Therefore, their
functioning will become uneconomical and unviable.
(8) Problem of skilled manpower:
A small entrepreneur located in backward area may not have problem of
unskilled workers but it may be exposed to the problem of non-availability of
skilled workers. Skilled workers may be reluctant to work in their areas and small
scale enterprise may not afford to pay the wages and other facilities demanded
by these persons.
Unavailability of skilled manpower result in lower productivity, deterioration of
quality, increase in wastages, rise in other overhead costs and finally adverse
impact on the profitability of these small scale units.
(9) Managerial problem:
Another serious problem for small scale units is managerial inadequacies.
Modern business demands vision, knowledge, skill, aptitude and whole hearted
devotion. The managerial competence of the entrepreneur is very important for
the success of any venture.
An entrepreneur is required to undergo training and counseling for developing his
organization revolves. Therefore, he must be fully conversant with all aspects of
management. Lack of proper commitment and managerial skill will add to the
problems of entrepreneurs.
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(10) Other problems:
In addition to above discussed problems, the small scale industries have been
constrained by a number of other problems such as trained technicians,
technological obsolescence, unorganized nature of operation etc.
Unit 5
Meaning and Concept of Women Entrepreneur:
Increase in cost of living has prompted the Indian women to undertake economic
activities in order to support their families. They are coming forward to take risks,
face challenges and prove to the world that their role in the society is no more
limited to that of buyers but they can be also successful sellers.
There are thousands of good examples where women have shown
entrepreneurial talents and have succeeded. Women entrepreneurs are the key
players in any developing country in terms of their contribution to economic
development. Now, it is imperative to know who is an women entrepreneur.
In the simplest sense, women entrepreneurs are those women who take the lead
and organise the business or industry and provide employment to others. It
signifies that section of female population who venture out into industrial
activities. It may be defined as a woman or group of women who initiate,
organise and run a business enterprise.
However, Government of India has given a broader definition of the term women
entrepreneur. It defined women entrepreneur as "an enterprise owned and
controlled by women having a minimum financial interest of 51% of the capital
and giving at least 51% of the employment generated in the enterprise to
women".
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According to J.A. Schumpeter, "Woman who innovates, imitates, or adopts a
business activity is called woman entrepreneur." Thus women entrepreneur are
those women who initiate, organise and operate business enterprise and want to
prove their mettle in innovative and competitive jobs. She also want to oversee
and control every aspects of her business for its overall success.
Growth of Women Entrepreneurship:
Almost half of India's population consists of women. But they constitute a very
negligible proportion of the total entrepreneurs. Entrepreneurial traits and
competencies have not been well developed amongst the women entrepreneurs.
They are very shy in nature and emotionally attached to the family. They are
treated as weak and dependent on men. They are the neglected sections in the
society. The much low literacy rate 39%, low work participation rate 28% and low
urban population share 10% of women as compared to 63%, : 52% and 18%
respectively of their male counterpart well confirm their precarious position in the
society.
In spite of the above, in sixties, women have started entrepreneurial activities as
one- woman enterprises at home and from home for self-occupation and
engagement. The number of women entrepreneurs were only 6000 which
miserably low during the period.
Indian women started their entrepreneurial work in 1970s. Their entrepreneurship
is traced out as an extension of kitchen activities mainly pickles, powder and
pappad. Women are encouraged to start an occupation or venture with an urge
to do something independently started to tide over their economic difficulties and
responsibilities.
In the seventies, Government of India has also brought a change in its policy
objective of welfare approach of women to development approach of women.
Women were given priorities in all the sectors including small scale industries
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sector. As a result, the number of women entrepreneurs has increased over the
years.
During 1980s, government and non-government bodies have paid increasing
attention to women entrepreneurs through formulation of various policies and
programmes and introduction of new schemes and incentives. It adopted a multi-
disciplinary approach for development of women entrepreneurs. Women
entrepreneurs were given top priority for implementation of programmes under
agricultural and its allied activities of diary farming, poultry, animal husbandary,
handlooms, handicrafts and small scale industries, etc.
In the nineties, out of the total women population of 437.10 millions, there are
126.48 million women workforce of which only 1,85,900 women accounting for
self employed in the country. This indicates a dismally low level of women
participation in the entrepreneurial activities.
Further women entrepreneurs in India accounted for 9.01% of the total 1.70
million entrepreneurs during 1988-89. There were more than 2,95,680 women
entrepreneurs claiming 11.2% of the total 2.64 million entrepreneurs in India
during 1995-96. The number of women entrepreneurs have increased to
3,28,000 in 1996-97.
During the ninth five year plan, the government has introduced in 1998 an
important scheme on Trade Related Entrepreneurship of Assistance and
Development (TREAD) aiming at economic empowerment of women in rural,
urban and semi-urban areas. It develops their entrepreneurial skill and eliminates
the constraints faced by women entrepreneurs.
REASONS FOR SLOW PROGRESS OF WOMEN ENTREPRENEURS IN INDIA
The problems and constraints experienced by women entrepreneurs have
resulted in restricting the expansion of women entrepreneurship. The major
barriers encountered by women entrepreneurs are:
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The greatest deterrent to women entrepreneurs is that they are women. A kind
of patriarchal- male dominant social order is the building block to them in their
way towards business success. Male members think it a big risk financing the
ventures run by women
Male chauvinism is still prevalent in many parts of the country yet. Women are
looked upon as ―abla‖ i.e. weak in all respects. In a male dominated society,
women are not treated equal to men that act as a barrier to woman‘s entry into
business.
Women entrepreneurs have to face a stiff competition with the men
entrepreneurs who easily involve in the promotion and development area and
carry out easy marketing of their products with both the organized sector and
their male counterparts. Such a competition ultimately results in the liquidation of
women entrepreneurs.
Lack of self-confidence, will-power, strong mental outlook and optimistic
attitude amongst women creates a fear from committing mistakes while doing
their piece of work. The family members and the society are reluctant to stand
beside their entrepreneurial growth.
Women in India lead a protected life. They are even less educated,
economically not stable nor self-dependent which reduce their ability to bear
risks and uncertainties involved in a business unit,
The old and outdated social outlook to stop women from entering in the field of
entrepreneurship is one of the reasons for their failure. They are under a social
pressure which restrains them to prosper and achieve success in the field of
entrepreneurship
Unlike men, women mobility in India is highly limited due to many reasons. A
single women asking for room is still looked with suspicion. Cumbersome
exercise involved in starting with an enterprise coupled with officials humiliating
attitude towards women compels them to give up their spirit of surviving in
enterprise altogether.
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Women's family obligations also bar them from becoming successful
entrepreneurs in both developed and developing nations. The financial
institutions discourage women entrepreneurs on the belief that they can at any
time leave their business and become housewives again.
Indian women give more emphasis to family ties and relationships. Married
women have to make a fine balance between business and family. The business
success also depends on the support the family members extended to women in
the business process and management.
The educational level and family background of husbands also influences women
participation in the field of enterprise.
Absence of proper support, cooperation and back-up for women by their own
family members and the outside world people force them to drop the idea of
excelling in the enterprise field. They are always making many pessimistic
feelings to be aroused in their minds and making them feel that family and not
business is a place meant for them.
Many women take the training by attending the Entrepreneurial Development
programme without an entrepreneurial bent of mind. Women who are imparted
training by various institutes must be verified on account of aptitude through the
tests, interviews, etc.
High production cost of some business operations adversely affects the
development of women entrepreneurs. The installations of new machineries
during expansion of the productive capacity and like similar factors discourage
the women entrepreneurs from venturing into new areas.
Women controlled business are often small and it is not always easy for
women to access the information they need regarding technology, training,
innovative schemes, concessions, alternative markets, etc. Just a small
percentage of women entrepreneurs avail the assistance of technology and they
too remain confined to word processing software in the computer. They hardly
make use of advanced software available like statistical software SAP,
Accounting Package like TALLY, Animation software 3D MAX, internet, etc
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Lack of awareness about the financial assistance in the form of incentives,
loans, schemes etc. by the institutions in the financial sector. So the sincere
efforts taken towards women entrepreneurs may not reach the entrepreneurs in
rural and backward areas.
Achievement motivation of the women folk found less compared to male
members. The low level of education and confidence leads to low level
achievement and advancement motivation among women folk to engage in
business operations and running a business concern.
SUGGESTIONS FOR THE GROWTH OF WOMEN ENTREPRENEURS
Right efforts from all areas are required in the development of women
entrepreneurs and their greater participation in the entrepreneurial activities.
Entrepreneurship basically implies being in control of one‘s life and activities and
women entrepreneurs need to be given confidence, independence, and mobility
to come out of their paradoxes. The following measures are suggested to
empower the women to seize various opportunities and face challenges in
business.
There should be a continuous attempt to inspire, encourage, motivate and
cooperate women entrepreneurs.
An Awareness programme should be conducted on a mass scale with the
intention of creating awareness among women about the various areas to
conduct business.
Attempts should be there to enhance the standards of education of women in
general as well making effective provisions for their training, practical experience
and personality development programmes, to improvise their over-all personality
standards.
Organize training programmes to develop professional competencies in
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Entrepreneurship notes III semester MBA
managerial, leadership, marketing, financial, production process, profit planning,
maintaining books of accounts and other skills. This will encourage women to
undertake business.
Vocational training to be extended to women community that enables them to
understand the production process and production management.
Skill development to be done in women's polytechnics and industrial training
institutes. Skills are put to work in training-cum-production workshops.
Educational institutes should tie up with various government and non-
government agencies to assist in entrepreneurship development mainly to plan
business projects.
International, National, Local trade fairs, Industrial exhibitions, seminars and
conferences should be organized to help women to facilitate interaction with
other women entrepreneurs.
Women in business should be offered soft loans & subsides for encouraging
them into industrial activities. The financial institutions should provide more
working capital assistance both for small scale venture and large scale ventures.
Making provision of micro credit system and enterprise credit system to the
women entrepreneurs at local level.
Schemes/institutions promoting women entrepreneurs
Prime Minister‘s Rojgar Yojana (PMRY)
Entrepreneurial Development programme (EDPs)
Management Development progammes
Women‘s Development Corporations (WDCs)
Marketing of Non-Farm Products of Rural Women (MAHIMA)
Assistance to Rural Women in Non-Farm Development (ARWIND) schemes
Trade Related Entrepreneurship Assistance and Development (TREAD)
Working Women‘s Forum
Indira Mahila Yojana
Indira Mahila Kendra
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Mahila Samiti Yojana
Mahila Vikas Nidhi
Micro Credit Scheme
Rashtriya Mahila Kosh
SIDBI‘s Mahila Udyam Nidhi
Mahila Vikas Nidhi
SBI‘s Stree Shakti Scheme
NGO‘s Credit Schemes
Micro & Small Enterprises Cluster Development Programmes (MSE-CDP).
National Banks for Agriculture and Rural Development‘s Schemes
Rajiv Gandhi Mahila Vikas Pariyojana (RGMVP)
Priyadarshini Project- A programme for ‗Rural Women Empowerment and
Livelihood in Mid Gangetic Plains‘
NABARD- KfW-SEWA Bank project
Need and importance of women entrepreneurs
It is imperative to note the participation of women in economic activities as self-
employed individuals. Many of the traditional occupations open to women were
mainly based on caste, creed and the nature of self-employment based
on the standard of living. Presently, women are generating employment for
themselves in an unorganized sector and another category of women who
provide employment for others.
The country needs to mobilize and utilize fully all its resources including human
resources. The participation of women in economic activities is necessary not
only from a human resource point of view but also is essential even from the
objective of raising the status of women in the society.
The economic status of the women is now accepted as an indicator of a
society‟s stage of development and therefore it becomes imperative for the
government to frame policies for development of entrepreneurship among
women. The long-term objectives of the development programmes for women
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Entrepreneurship notes III semester MBA
should aim to raise their economic and social status in order to bring them into
the mainstream of national life and development. For this, due recognition has
to be accorded to the role and contribution of women in the various social
economic and political and cultural activities
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