ENTREPRENEURSHIP DEVELOPMENT

Module I: Understanding Entrepreneurship

ENTREPRENEURSHIP

• A theory of evolution of economic activities.

• A continuous process of economic development.

• An ingredient to economic development.

• Essentially a creative activity or an innovative function.

• A risk taking factor which is responsible for an end result.

• Usually understood with reference to individual business.

• The name given to the factor of production, which performs the functions of

enterprise.

• Creates awareness among people about economic activity.

• Generates Self-employment and additional employment

WHY ENTREPRENEURSHIP

• To improve backwardness of the people.

• Economic development of the region.

• To analysis resource utilization.

• Proper utilization of human potentiality.

• Special attention to take up new activities.

• To create self-employment and generation of employment opportunity.

• Eradication of regional imbalances.

• Better economic gain.

The early history of entrepreneurship in India reflects from the culture, customs

and tradition of the India people. The Baliyatra Festival of Cuttack, Orissa

reminiscence of past glory of International trade. To process of entrepreneurship

therefore passed through the potential roots of the society and all those who accepted

entrepreneurial role had the cultural heritage of trade and business. Occupational

pursuits opted by the individual under the caste system received different meaning of

value attached to entrepreneurship. Which is based on social sanctions? Vaishyas are

considered to venture in to business pursuits. As society grew and the process of

business occupation depended and the value work tended towards change and the

various occupational role interchanged with non-role group and sub-groups. People from

different castes and status also entered into the entrepreneurial role.

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The emergence of entrepreneurship in this part of the country got localized and

spread effect, took its own time. The concept of growth theory seems to be closely

related in explaining the theory of entrepreneurship development as well.

After the Second World War entrepreneurship received new meaning for

attaining economic development within the shortest possible time. But in the process

they were seriously handicapped by the rigid institutional setup, political instability,

marketing imperfection and traditional value system.

Britishers for their own ulterior motive destabilized the then self sufficient Indian

economy. England flourished and India had to pay for that. In the process India suffered

heavy industrial loss.

Development of business eateries is a complex phenomenon influenced by both

the internal and external factors. Internal factor originates in policies and attitude of the

entrepreneur themselves.

In controlling the business itself, external factors are beyond the control of the

business entrepreneur. They alone account for unpredictability of returns and risks

assumed by the entrepreneur. A steady growth can be observed on the business of long

cherished history of entrepreneurial development in the country is certainly promised or

the environment to be created by the state and its agencies.

The entrepreneurial motivation is one of the most important factors which

accelerate the pace of economic development by bringing the people to undertake risk

bearing activities. In many of the developing countries a lot of attention is being paid to

the development of entrepreneurship because it is not the proprietary quality of any

caste and community.

The entrepreneurship is usually understood with reference to individual business.

Entrepreneurship has rightly been identified with the individual, as success of enterprise

depends upon imagination, vision, innovativeness and risk taking. The production is

possible due to the cooperation of the various factors of production, popularly known as

land, labor, capital, market, management and of course entrepreneurship. The

entrepreneurship is a risk-taking factor, which is responsible for the end result in the

form of profit or loss.

According to A Schumpeter “The entrepreneurship is essentially a creative

activity or it is an innovative function”.

The economic activity with a profit motive can only be generated by promoting an

attitude towards entrepreneurship. The renewed interest in the development of

entrepreneurship to take up new venture should emphasize on the integrated approach.

The developments of entrepreneurship will optimize the use of the unexploited

resources; generate self-employment and a self sufficient economy.

The young entrepreneur should be motivated to come out with determination to

do something of their own and also to contribute to the national income and wealth in the

economy. If the country wants to achieve the growth at the grass root level, through

social justice and the crimination of poverty, it will have to provide institutional support

and structural changes in organization of financial institutions to promote

entrepreneurship development. Industrial development in any region is the outcome of

purposeful human activity and entrepreneurial thrust.

David Melelland emphasized the importance of achievement motivation as the

basis of entrepreneurial personality and a cause of economic and social development

through entrepreneurship by fulfilling the following needs such as 1) Need for power 2)

Need for affiliation and 3) Need for achievement.

Another school of thought says “entrepreneurship is a function of several factors

i.e. individual socio cultural environment and support system”.

Entrepreneurship is vibrant assertion of the facts that individual can be

developed, then outlook can be changed and their ideas can be converted into action

though on organized and systematic program for entrepreneurs. It was also felt that

systematic training can be given a better output and attracting people for taking up

business venture can change economic scenario.

Basic objective in developing entrepreneurship and multiplying them in the

society has been to enable the society to generate productive human resource, mobilize

and sustain the same in subsequent process of development. The spontaneity and

continuity of the process would depend on the kind of people that can be prompted and

groomed in the entrepreneurial career.

Sociologists, Psychologists and economists have all attempted to give a clear

picture of the entrepreneur. Sociologists analyze the characteristic of entrepreneurs in

terms of caste, family, social value and migration.

Psychologists on the other hand attempt to isolate entrepreneurs from general

population on various personality trials such as need for achievement, creativity,

propensity to take risk, independence leadership etc.

Economists lighted situational characteristics such as occupational

backgrounds access to capital business and technological experience and managerial

skills with economic gains considered as characteristic of entrepreneur.

As entrepreneur by implication is one who ventures out, who prefers change as

a means of growth and it the process is prepared to take a calculated risk while taking

risks he is aware of the possibilities, success as well as the consequence of failure.

Entrepreneurship is the act of being an entrepreneur, which can be defined

as "one who undertakes innovations, finance and business acumen in an effort to

transform innovations into economic goods".

This may result in new organizations or may be part of revitalizing mature

organizations in response to a perceived opportunity. The most obvious form of

entrepreneurship is that of starting new businesses (referred as Startup Company);

however, in recent years, the term has been extended to include social and political

forms of entrepreneurial activity. When entrepreneurship is describing activities within a

firm or large organization it is referred to as intra-preneurship and may include corporate

venturing, when large entities spin-off organizations.

Entrepreneurial activities are substantially different depending on the type of

organization and creativity involved. Entrepreneurship ranges in scale from solo projects

(even involving the entrepreneur only part-time) to major undertakings creating many job

opportunities. Many "high value" entrepreneurial ventures seek venture capital or angel

funding (seed money) in order to raise capital to build the business. Angel investors

generally seek annualized returns of 20-30% and more, as well as extensive

involvement in the business. Many kinds of organizations now exist to support would-be

entrepreneurs including specialized government agencies, business incubators, science

parks, and some NGOs. In more recent times, the term entrepreneurship has been

extended to include elements not related necessarily to business formation activity such

as conceptualizations of entrepreneurship as a specific mindset resulting in

entrepreneurial initiatives e.g. in the form of social entrepreneurship, political

entrepreneurship, or knowledge entrepreneurship have emerged.

The entrepreneur is a factor in microeconomics, and the study of entrepreneurship

reaches back to the work of Richard Cantillon and Adam Smith in the late 17th and early

18th centuries, but was largely ignored theoretically until the late 19th and early 20th

centuries and empirically until a profound resurgence in business and economics in the

last 40 years.

Concept of Entrepreneurship

It has assumed super importance for accelerating economic growth both in

developed and developing countries. It promotes capital formation and creates wealth in

country. It is hope and dreams of millions of individuals around the world. It reduces

unemployment and poverty and it is a pathway to prosper. Entrepreneurship is the

process of searching out opportunities in the market place and arranging resources

required to exploit these opportunities for long term gains. It is the process of planning,

organizing, opportunities and assuming. Thus it is a risk of business enterprise. It may

be distinguished as an ability to take risk independently to make utmost earnings in the

market. It is a creative and innovative skill and adapting response to environment of

what is real.

Promotion of Entrepreneurship

Given entrepreneurship's potential to support economic growth, it is the policy goal of

many governments to develop a culture of entrepreneurial thinking. This can be done in

a number of ways: by integrating entrepreneurship into education systems, legislating to

encourage risk-taking, and national campaigns. An example of the latter is the United

Kingdom's Enterprise Week, which launched in 2004.

An entrepreneur is a person who has possession of a new enterprise, venture or idea

and is accountable for the inherent risks and the outcome of a product. 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 intermediary between capital and

labour". A broader definition by Say: "The entrepreneur shifts economic resources out of

lower and into higher productivity and greater yield.

WHO IS AN ENTREPRENUER

• He is a person who develops and owns his own enterprise

• He is a moderate risk taker and works under uncertainty for achieving the goal.

• He is innovative

• He peruses the deviant pursuits

• Reflects strong urge to be independent.

• Persistently tries to do something better.

• Dissatisfied with routine activities.

• Prepared to withstand the hard life.

• Determined but patient

• Exhibits sense of leadership

• Also exhibits sense of competitiveness

• Takes personals responsibility

• Oriented towards the future.

• Tends to persist in the face to adversity

• Convert a situation into opportunity.

Motivation for Economic Development and Entrepreneurial Achievement:

Entrepreneurship plays an important role in the economic growth and

development of nation. It is a purposeful activity includes in initiation, promotion and

distribution of wealth and service. An entrepreneur is a critical factor in economic

development and an integral part of the socio-economic transformation. It is a risk taking

activity and challenging tasks, needs utmost devotion, total commitment and greater

sincerity with fullest involvement for his personal growth and personality. The

entrepreneurial career is not a one day job nor is it bed of roses. Prosperity and success

never come easily. It takes time and needs hard work, systematic planning and business

acumen to be successful entrepreneur.

Therefore, before choosing this path one should be very careful in knowing

about his own self. This introspection process helps him in knowing about himself. Every

person has his own potentiality and resource. How he looks in to this aspect. If the

person cans understand or identify his inner traits then it helps him choosing the right

path for which he should look into his beliefs, faith values etc. For an entrepreneur it is of

great importance to know about him on the basis of above mentioned individual

consideration. These consideration give him ample scope to face his own self by asking

the question “Who I am?” If he can give meaning answer to this complex question with

exemplary courage and utter personal disregard to being exposed, then it helps him in

getting a fair idea about himself. On the whole it helps him to making the right decision in

choosing the right path for getting involved for deciding the future course of action. This

is nothing but a self-identification process. After having being proper identified his

strength, weakness and ability, he can make a decision of his choice, whether he will

take up entrepreneurship as a career or not. If yes, then in which entrepreneurial area.

Choosing entrepreneurial career is like choosing a life partner. The person has to

be there in the job forever and may have to continue in that chosen line for generations

to generation and grows in this process if it is matching; if it mismatches it goes the other

way round.

Considering this aspect he should always be governed by three basic qualitative

instincts to serve in the world of uncertainty. These are –

(1) Will,

(2) Zeal, and

3) Skill.

The hypothesis that entrepreneurship is linked to economic growth finds its most

immediate foundation in simple intuition, common sense and pure economic

observation: activities to convert ideas into economic opportunities lie at the very heart of

entrepreneurship. Entrepreneurship is a source of innovation and change, and as such

spurs improvements in productivity and economic competitiveness.

Role of entrepreneurship in economic development:

Entrepreneur:

An entrepreneur can be regarded as a person who has the initiative skill and motivation

to set up a business or enterprise of his own and who always looks for high

achievements. He is the catalyst for social change and works for the common good.

They look for opportunities, identify them and seize them mainly for economic gains. An

action oriented entrepreneur is a highly calculative individual who is always willing to

undertake risks in order to achieve their goals.

Need for Entrepreneurship Development

Economic development essentially means a process of upward change whereby

the real pr capita income of a country increases over a period of time .Entrepreneurship

has an important role to play in the development of a country. It is one of the most

important inputs in economic development. The number and competence of

entrepreneurs affect the economic growth of the country.

The economic history of the presently advanced countries like USA, Russia and japan

supports the fact that economic development is the outcome for which entrepreneurship

is an inevitable cause. The crucial and significant role played by the entrepreneurs in the

economic development of advanced countries has made the people of developing and

under developed countries conscious of the importance of entrepreneurship for

economic development. It is now a widely accepted fact that active and enthusiastic

entrepreneurs can only explore the potentials of the countries availability of resources

such as labor, capital and technology.

The role of entrepreneurs is not identical in the various economies. Depending on the

material resources, industry climate and responsiveness of the political system, it varies

from economy to economy. The contribution of entrepreneurs may be more in favourable

opportunity conditions than in economies with relatively less favourable opportunity

conditions.

Entrepreneurship and Economic Development

Entrepreneurship helps in the process of economic development in the following ways:

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 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 entrepreneurism helps in dispersing the

economic power amongst the population. Thus it helps in 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

commodes decreases the consumers get the power to buy more goods 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 tries to introduce newer and newer technique of production of

goods and services. An entrepreneur brings economic development through innovation.

Entrepreneurship also helps in increasing productivity and capital formation of a

nation. In short, the development of the entrepreneurship is inevitable in the economic

development of the country. The Role played by the entrepreneurship development can

be expressed in the following words:

“Economic development is the effect for which entrepreneurship is a cause”

Entrepreneurship directly affects the economic development and also serves as

the positive source of economic growth. Economic development means an in crease in

the per capita income of the country. Entrepreneurship is driving force behind the growth

and development of the country. There is direct relationship between development and

entrepreneurship.

Many economists’ theories consider economic development and entrepreneurship as

complimentary to each other.

David McClelland’s Theory of Achievement Motivation:

This theory is considered as one of the best theories of entrepreneurial development.

This theory revolves around entrepreneurial behavior and needs. It focuses on three

aspects:

Need for achievement: This need plays an important role in determining

the success of activities done in to McClelland, economic behavior can be

described through achievement orientation. McClelland wrote: “need for

achievement is a desire to do well, not so much for the sake of social recognition

or prestige, but for the sake of inner feeling of personal achievement.”

Need of Power: This refers to the desire of a person to be influential in the

group. This need offers direct satisfaction and authority to managers.

Need for affiliation: This need helps in maintaining a personal relationship with

the subordinates. People with high need affiliation are more desperate about

love, relationships and friendships. They love others and expect others to love

them.

On the basis of above mentioned needs, McClelland pointed out that following factors

are necessary for entrepreneurial development:

Twin characteristics of entrepreneurship:

i) Performing activities in a brilliant manner,

ii) Decision-making under uncertainty.

Belief in personal accomplishment: Need for achievement means An

individual’s need for personal success through excellence. Such person enjoys

taking responsibility. They take moderate risk and try to come out as winners all

the time.

Psychological factors for entrepreneurial motivation: Need for achievement

encourages the individual to take risk. Psychological factors that are responsible

for entrepreneurial development are as follows:

i) Risk bearing,

ii) Goal orientation,

iii) Desire to achieve success,

iv) Willingness to take responsibility,

v) Anticipating possibilities,

vi) Feeling of personal accomplishment,

vii) Concrete measures of task performance.

Inner concerns as the prime movers: According to McClelland, inner concerns

are prime movers of entrepreneurship. These forces motivate the person to take

risks, invent new ideas and attain profit maximization.

Lack of ambition in Less Developed Countries (LDCs): Ambition among people of

much country is very important for its development. In an underdeveloped

country people lack ambition, which is a major hurdle for the need of

achievement that results in the lack of enterprise in LDCs?

Enterprise and Society:

The activities of an entrepreneur cover a wide range in a conducive and congenial social

environment. The social environment includes a number of factors which are critical for

the growth of entrepreneurship and are listed as follows:

Family background: Family background is an important determinant in

entrepreneurial environment and involves factors like family type, family status,

and so on.

Caste system: There are certain castes that have more entrepreneurial

talent than others. This is because they have latent potential and specialized

culture by virtue of certain activities and/or means of livelihood traditionally

practiced by them that helps to foster entrepreneurship.

Social sanctions: Social sanctions and role expectations are important factors

that determine the growth of entrepreneurs.

Religious background: Religion too plays a crucial role in influencing

entrepreneurial emergence and growth.

Kith and kin: Entrepreneurial initiatives are also determined by the success of

one’s kin, friends, relatives and others in any particular venture.

Social Status: Social status contributes greatly to the growth of the

entrepreneurship. It is human nature to want to rise in the society and be

regarded as a man of esteem.

Social values: Social values and philosophy of a country are important in the

growth of entrepreneurial culture in the society.

Social responsibility of the business: This entails efficient utilization and

conservation of natural resources for the benefit of the society. Entrepreneurial

initiatives must to be carried on within the framework of social rules, laws of the

land and the social policies.

Why and how to start Business:

Entrepreneurial traits and skills:

Entrepreneurs play a significant role in the development of the economy. An

entrepreneur affects the lives of many people as it creates new job, provides the

product, develops the technology, and provides feasible solutions to the existing social

and environmental problems. Entrepreneurship creates wealth for the person and for the

country. It is the most powerful force of the economy.

Today, the business environment and technological advancements present

complex challenges to an individual’s entrepreneurial drive and determination. Most

entrepreneurs prefer to outsource projects to save on operating cost. They even

outsource the most critical process of their manufacturing or business operations.

Entrepreneurs need the right interest to initiate the right motivation for starting a

small business or project. Interest comes from the dream to improve an individual’s

lifestyle, social status, control of future, and raise standard of living. Entrepreneurship is

a natural medium to fulfill economic aspirations, channel drive and energy, and build

something for themselves.

Ability to organize: He should be able to organize various factors effectively. He

has to understand all the aspects of the business.

Professional approach: He should be objective and professional in approach.

Risk bearer: He should be risk taker. He should be ready to bear risk and

uncertainties.

Innovative: Organizer should be innovative. He should adopt modern techniques

of production. He should not be reluctant to changes.

Decision Making: One has to take right decision at a right time by showing his

promptness. Quick decisions are expected but hasty decisions shouldn't be

taken. Delay in decisions may increase cost of project and reduce the profits.

Negotiation skills: Businessman regularly comes into contact with various

persons like consumers, workers, government officials, etc. so he should

communicate tactfully.

Vision & Leadership: Entrepreneurs must have a vision of where the company

will be in the future.  In addition, you must be able to communicate you vision so

as to motivate employees, investors, and partners to help you achieve that

vision.  You must be able to identify staffing needs, expertly fill them, and lead

your team to success. Rarely do entrepreneurs build successful companies all by

themselves.

Focus & Execution: Entrepreneurs must focus to make sure that goals are

achieved, customers are satisfied, and employees are motivated. For most

entrepreneurs, staying focused is harder than it sounds.  Be careful not to be

seduced by the next exciting opportunity without executing on the priorities at

hand.  And don't let perfectionism prevent you from taking action, either; at the

end of the day, a product on the market is better than a product shelved due to

lack of focus, execution, or perfectionism.  Get to market and get feedback from

your customers as soon as possible.

Persistence & Passion:  As an entrepreneur, you must be passionate about

what you are trying to accomplish. In addition, you must be willing to commit

whatever is needed of them, whether it's time, energy, money, or other

resources.  You must persist through trying times (which will be frequent), and

fight as much as needed to achieve the goals you have set for yourself and your

team.

Technical skills:  As the owner of your firm, you may not need to be the most

skilled technician on your team.  But you need to have necessary foundational

knowledge to be able to lead your technical team and make informed decisions. 

Flexibility: Successful entrepreneurs understand that the world and the

environment in which they operate are constantly changing. While you must

focus on the end game, you also must adapt your strategies and offerings to

meet changing market conditions.

A wide range of skills are seen as entrepreneurial and useful to entrepreneurs, these include both personal traits and skills:

Management skills - the ability to manage time and people (both yourself and others) successfully

Communication skills and the ability to sell ideas and persuade others

The ability to work both as part of a team and independently Able to plan, coordinate and organize effectively Financial literacy Able to research effectively, for example available markets, suppliers, customers and the competition

Self motivated and disciplined

Adaptable Innovative thinking and creative The ability to multi-task Able to take responsibility and make decisions The ability to work under pressure Perseverance Competitiveness Willingness to take risks Ability to network and make contacts

Many, if not all of these skills and traits are also useful to entrepreneurs, those who are

entrepreneurial within an existing organization (internal entrepreneurs). These skills and

traits would also benefit all employees within a business and so are useful for graduates

to have. Many of these skills, such as communication skills and the ability to work as

part of a team, are already promoted within existing degrees.

In addition to those more general skills listed above, other more specific or business

related skills, will be of use to entrepreneurs, these may include:

Being able to draw up a business plan for a new venture,

Being able to market and sell a new product or idea, Financial skills, such as book-keeping and calculating tax, Awareness of intellectual property and possibly patent law.

The most significant influence on an individual's decision to become an entrepreneur is

workplace peers and the social composition of the workplace. Entrepreneurs also often

possess innate traits such as extroversion and a propensity for— risk-taking. According

to Schumpeter, an entrepreneur characteristically innovates, introduces new

technologies, increases efficiency, productivity, or generates new products or services.

An entrepreneur acts as a catalyst for economic change and research indicates that

entrepreneurs are highly creative individuals who imagine new solutions by generating

opportunities for profit or reward.

There is a complexity and lack of cohesion between research studies that

explore the characteristics and personality traits of, and influences on, the entrepreneur.

Most studies, however, agree that there are certain entrepreneurial traits and

environmental influences that tend to be consistent. Although certain entrepreneurial

traits are required, entrepreneurial behaviors are dynamic and influenced by

environmental factors.

Psychological studies show that the psychological propensities for male and

female entrepreneurs are more similar than different. Perceived gender differences may

be due more to gender stereotyping. There is a growing body of work that shows that

entrepreneurial behavior is dependent on social and economic factors. For example,

countries which have healthy and diversified labor markets or stronger safety nets show

a more favorable ratio of opportunity-driven rather than necessity-driven women

entrepreneurs. Empirical studies suggest that women entrepreneurs possess strong

negotiating skills and consensus-forming abilities.

Mind Vs. Money in Commencing New Ventures:

Starting a new business venture can be an exciting and important decision for an

individual with ambition. However, there are a number of considerations that new

entrepreneurs need to keep in mind as they take the initiative to establish their own

enterprise. Failure to fully consider some substantial concerns could leave entrepreneurs

feeling uncertain in the midst of their new ventures.

Develop a solid business plan: Once you know which entrepreneurial avenue you plan

to explore, you need to begin researching the industry. Get a grasp on the recent market

trends and where the market will likely be headed in the near future. Based on these

observations, make a list of obtainable goals that will enable your enterprise to get

started off on the right foot. Then brainstorm various approaches to achieving these

goals. Determine which scenario is the most sensible for you to commit to. Finally, if

your efforts should fall short of success, you still have alternative options to fall back on.

Follow all legal regulations set for your industry: Getting a business license usually

means jumping through a variety of legal hoops no matter what the specific occupation.

Some legal prerequisites can go by the wayside while trying to establish a new

enterprise. Deciding which insurance policies to secure and what kind of health benefits

to offer potential employees are just a few legal considerations you might have to think

about. One technicality many new professionals forget about is the use of surety bonds,

which are required by law in many industries before a business license can be issued.

Surety bonds are similar to—though separate from—insurance, as they provide an

additional financial protection. Be sure to check local bonding regulations for your

industry to make sure your business will be in compliance, as auto dealer bond

regulations are obviously very different from mortgage broker bond regulations.

Be prepared to invest a lot without earning it back immediately: With limited

exceptions, you shouldn’t expect to turn a profit for a few years. So early on, you’ll need

to determine how much money you should plan to invest in your venture during the first

few years. It’s also a good idea to secure either extra savings funds or a secondary

income to live off of during this time.Find a generous lender who understands your

business plan and has faith in its ability to succeed. Such a lender will back you up when

times get rough. And don’t forget that you’ll probably invest a great deal of time and

money to get your name known within your industry.

Never underestimate the importance of effective (online) marketing: Marketing in

today’s business market is neither simple nor limited. With seemingly infinite advertising

opportunities—from print to television to the internet—ingenuity can go a long way. Build

an engaging website that’s easy to navigate, showcasing your business to potential

clients or consumers. Research shows that the majority of people judge a business

based on its online presence. Without a website, you’ll be left behind; with an

unprofessional or confusing one, you could misrepresent the quality of your business.

Fully commit yourself to your endeavor: Don’t expect phenomenal success if you

aren’t willing to fully dedicate yourself to your project. Realize that this might mean late

nights at the office and choosing business meetings over social events. Since it’s your

undertaking, it’s up to you to decide when, where, and how much you work. You’ve

already made the decision to strike out on your own, all that’s left is executing your

success.

How to Raise Money for a New Venture:

There are many potential entrepreneurs out there, wondering how to raise money for a

business venture.

Anyone looking to start a company or business venture of their own, needs to

know how to raise money for a business. The capital is one of the first things that need

to be taken into consideration when one is setting out on a business venture, and there

are many different sources to obtain this capital. It is not necessary to stick to one

particular source rigidly; even a combination of various different sources can be made

use of.

Anyone who is wondering how to raise money for a restaurant, a small business,

an advertising agency or any other small-scale venture should keep these methods in

mind. Approaching the right people for the money is vitally important for the success of

the business, and if this is not catered to properly, the business will be doomed from the

very beginning.

Personal Savings: This is the most obvious source of money for starting a business. If

you have saved up enough money over the years, go ahead and make use of it for your

business. You will not be answerable to anyone, and you will not have to worry about

repaying someone. If you choose this option, ensure that you are not using all your

savings though. Many people neglect this option of how to raise money for a business

because if they lose the money, they will have nothing left to live on.

Venture Capitalists: This is the next most obvious source for your potential business.

Venture capitalists are professional agencies who put in money, or venture capital, into

an upcoming business. What they get in return is either a share of the business, or a

share of the profits, or pretty high interest rates. It may sound like exploitation, but this is

one of the best ways to get money. Venture capitalists are always looking for new and

innovative business ideas that are likely to succeed.

Angel Investors: These are a refined form of venture capitalists, but many people think

they mean the same thing. Angel investors are less demanding than venture capitalists,

and are with your business in the long run. Usually, they are someone who you would

know personally, and they are simply looking for ways to get a higher return on their

investment. How companies raise money depends a lot on the nature of the business,

and the method of entrepreneurship adopted. Angel investors also help out the business

by providing some guidance and mentoring.

Personal Borrowings: Here is a method on how to raise money for a business that

should be avoided as far as possible. You can borrow money from someone you know,

namely your friends, family or other people. The problem here is that once you mix

business and personal relationships, things start to get a bit sour. This is a situation that

needs to be handled with great tact and diplomacy, and not everyone can manage to do

that. Still, this is a method that many people opt for.

Bank Loans: Another answer to how to raise money for a small business, is to

approach a bank for a small business loan. With banks you will not be required to pay a

very high interest rate, but you will need sufficient documentation about the business

model of your business. Along with that, your credit history and financial stability will also

be scrutinized, to see if you are worthy of getting the loan. Most people would love to get

a bank loan, but are simply not eligible. This is especially true for someone who is

wondering how to raise money to start a business without owning any fixed assets.

Advertising: Here is another answer, but one that requires a suitable amount of

investment, and more than a fair share of patience. If you can handle the advertising of

your upcoming company well, you can get more than enough money to sustain it in the

long run. There are some websites that also let you advertise your business plan, and

then suit you up with a matching investor. This is a slightly unreliable method for sure,

but it works wonders if one can find the right match. People wondering how to raise

money for a marketing campaign, can use the methods already mentioned above.

Other Options: Here are some other answers to the question 'How to raise money for a

business'. One can approach some small business investment companies, some

business development commissions, some life insurance companies or a money broker

as well. The reliability of these other options will not be very high, and their demands

may be exorbitant, but if you have run out of all other options, then this is something that

you will need to resort to.

You should move as soon as possible in order to get as much capital and business

financing as you can. There are a variety of sources available to you, and as long as you

have a great and reliable business plan, you will be able to procure capital. It is not all

that difficult to learn how to raise money for a business, but all you need, more than

anything else, is the faith and belief in yourself.

Entrepreneurial success and failures

Entrepreneurial Failures:

In the Watson & Everett (Defining Small Business Failure) article small business failure

can be classified into seven primary reasons. The first one, being bankruptcy is defined

as discontinued operations with resulting losses to its creditors. Another reason for

discontinuance is prevention from further losses, which means the owner recognizes the

need to end the business due to continuing personal financial losses while the creditors

might still be receiving their agreed-upon payments. The third reason, ‘making a go of it’

is the most subjective reason as it is based upon personal goals not being reached.

While the business may not be running negative, the entrepreneur gives up because it

might be too time consuming, stressful, disapproving and whatnot compared to the

profit. The remaining reasons consist of retirement due to bad health, sale of business to

realize a profit, unknown and other reasons.

The reason I summarized 14 pages of text into one single paragraph is not out of haste

or to get off lightly, but because I considered it not to be essential in answering the topic

question. Since the first objective of this case is to give my opinion when an

entrepreneur has failed I will present a definition for it as well as four reasons that can

lead towards or away from it.

“An entrepreneur has failed when he/she stops being an entrepreneur.”

The best way to encourage entrepreneurship is to focus on the entrepreneur and not the

factual, statistical or financial results he/she or the nation in average performs. This is

why I focus on the individual entrepreneur when defining when he/she has failed and the

reasons behind it.

These reasons can be found in the first chapters of Kiyosaki (Retire Young Retire Rich):

The power of your mind and listening to yourself is the most important factor. Failing

your first business is the key critical event that will test if you have failed as an

entrepreneur. Listening to the loser, wimp, coward and cynic inside you will cause you to

stop being an entrepreneur and seek the security of working for another business.

However, choosing to listen to the winner, hero, giant and opportunist inside you will give

the strength and the whys to start another business venture.

Another factor, also created by your mind is reality. By continuously expanding your

reality about what you can do will help overcome obstacles that you previously thought

you can’t do. The process on how to do this is by being a lifelong learner.

The third reason an entrepreneur can fail is by listening to others. By listening to cynics

and poor people with limited reality you risk believing that starting a business is risky

while it does not have to be. The conflict of interest is caused due to differences in reality

while finding people with similar interests and reality will improve the business.

The last way an entrepreneur can fail is through giving in on their values. Everyone likes

to see themselves as honest, caring, loyal and fair. But when the going gets rough it’s

the thief, crook, liar and tyrant in you that can get your attention. By being able to block

them out and face your creditors, investors, co-workers and clients with the right values

when things go bad you won’t risk not getting the opportunity to start another business in

the future.

While these factors are explained in an overly simplified way it is a way of explaining my

shared views with this particular author while the direct answer to this question is my

personal thought written as a quotation.

How are failed entrepreneurs treated?

Again focusing on the entrepreneur we will find the relevant factors explaining how

entrepreneurs are treated and the reasons why some are treated differently than others.

Ask your creditors: The bankers’ and investors’ opinions about the entrepreneur will be

dependent on how they were treated when the business failed. If the exit strategy was

bankruptcy there is a great chance that the entrepreneur will have to find new creditors

for a new business venture. Then again, if the small business was terminated to prevent

further losses, and debts are ultimately paid these people will love you and want to hear

your next business plan and idea.

Ask your subordinates/co-workers: While founding a small business with the goal of

selling it with a profit might be an acceptable solution for the entrepreneur, the

employees of the company might not see eye to eye. Since selling or restructuring a

business might cost some employee’s their jobs it doesn’t matter how fancy the farewell

party is. And those who do get to keep their jobs might have good or bad opinions about

getting a new boss/business owner.

Ask your clients: The clients’ perspective on the entrepreneur goes through the product

it provides. The greater the need and benefits the product fills, the more supportive the

clients who used it are towards the entrepreneur wanting to start fresh. On the contrary

the product can be unhealthy, addictive or in another way unapproved by the society

sharing no respect towards the person enabling its distribution.

Ask your friends and family: When it comes to those who are nearest and dearest the

opinion will be based on their reality. If the majority thinks entrepreneurship is risky and

hard work he/she risks following their advice. If the majority thinks working all your life to

make others rich is risky then this can be the entrepreneur’s reality.

Why Do So Many New Businesses Fail?

1. Poor Execution

When you're the boss, the only place you should point fingers is at the mirror.

Crisp execution—rather than a clever idea— is vital to the success of new

businesses. It stands to reason, therefore, that poor execution is the downfall

of most startups that go bust. There are several ways you can avoid

execution failure. First, you should conduct an honest evaluation of your

skills and only pursue opportunities that are aligned with your strengths. Entrepreneurs who

are blinded by greed or arrogance are more prone to getting in over their heads. It's also

wise to surround yourself with talented people who aren't afraid to speak up when you're

headed off a cliff.

Companies with inept leadership usually fail in the first year or two, but even established

companies can stumble badly when they outgrow the capabilities of the founding team. Bill

Gates led Microsoft from inception to its current position as one of the largest and most

successful companies in history, but this is seldom the case. As a founder, you need the

discipline to know when to hand over the reigns to a professional manager who can take

your business to the next level.

2. No Viable Market

What if we launched a business and nobody showed up?

Each day, entrepreneurs from the "build it and they will come" school of

business invest their money in a cool idea with the hopes that customers

will magically appear once they open the doors. All too frequently, these

hopes turn out to be in vain. History is replete with ventures that crashed

and burned because the founders spent all of their time and money developing a product

without bothering to consider how to attract customers. Even worse, many did not really

understand what customers valued and were willing to pay for.

It's imperative to research and validate the market before you launch your business. Talk to

prospective customers and find out what they really need. Chances are, you will end up with

a much more compelling offering than what you initially dreamed up on your own.

Remember, find the customers first, and then look for a solution.

3. Too Much Leverage

Give me a lever long enough and I will bankrupt my company.

Mature companies can predict revenues over the next few quarters with

some degree of certainty. These businesses can make prudent use of

leverage, both financial (debt) and operating (fixed overhead costs), to

improve equity returns. However, the financial crisis of 2008 demonstrated how even the

most established companies can become over-leveraged, as Bear Stearns and Merrill Lynch

can well attest.

Revenues projections for early-stage companies can be all over the map, which means that

new ventures have even less margin for error than larger competitors. In this environment, it

can be dangerous to take on more than a modest amount of debt or other fixed obligations

(rent, salaries, etc.). If revenues take longer to ramp up than expected—as they nearly

always do—you may find yourself handing the keys of your business over to your creditors.

4. Undercapitalizing the Business

Maybe you should've waited to order that red Ferrari after all...

It's all too common for entrepreneurs to grossly underestimate the amount of

time and capital necessary to reach cash flow breakeven, causing many

promising ventures to shut down prematurely. Be conservative with your

financial projections and plan on having adquate funds when you launch to

cover all sunk costs (including startup losses) until your company becomes cash flow

positive.

If you don't have enough savings to cover the required investment, it may be tempting to

launch your startup under the assumption that you will be able to obtain funding at a later

date. While staging investment has its advantages (preserving the option to abandon, higher

valuation and—therefore—less dilution, etc.), this strategy can backfire and leave you unable

to get the money when you need it most or force you to negotiate with banks and investors

from a position of weakness. It's often better to change the business model to bring required

investment in line with available resources.

5. Lack of Competitive Advantages

Never bring a knife to a gunfight!

Does your town really need another dry cleaner, pizzeria, or lawn care service?

Entrepreneurs frequently start these me-too kind of businesses because of

their simplicity and modest capital requirements. However, the lack of

competitive barriers renders them extremely vulnerable to new entrants, who

will gladly cut prices to the bone to steal customers.

If you want your startup to thrive, you need something that insulates it from competition. It

could be a great location, a cool brand, proprietary technology, or a cost structure that

cannot be easily replicated. None of these advantages is likely to be permanent, but they

only need to shield you long enough for your company to take root. This will give you time to

make investments that create additional barriers.

6. Competing Head-to-Head with Industry Leaders

Better sharpen those elbows...

A sure sign of impending failure is an entrepreneur who plans to

bootstrap his new business while competing directly against entrenched

market leaders. Large businesses have enormous resources to deter

competitors from entering their markets. Big companies can undercut your prices,

outspend you on advertising, and choke off access to suppliers and distributors. I

strongly advise against making a frontal assault unless you have a world-class team and

very deep pockets. Even then, your chances of success are likely to be disappointing.

7. Picking a Niche that is too small

Don't be a market of one!

Most small businesses compete successfully against larger rivals by

specializing in a niche market. However, you still need to do your

homework to be sure that the niche is large enough to support your

business and that customers are not too expensive to find and serve.

You may discover that niche markets can be just as fiercely competitive as the mass

market. You need to figure out how fast your niche is growing and how much market

share you will need to capture.

If your financial projections require you to hold more than a few percent of market share

to remain profitable, be careful. Don't press ahead unless you can convincingly

demonstrate to yourself how your competitive advantages will enable you to become the

market leader.

 

8. Breakup of the Founding Team

Breaking up is hard on you -- and your company.

A startup can be a high-stress environment, especially when you are

struggling to turn the corner before the lights go out. At moments like

this, disagreements about the direction of the company or the division

of profits among the owners can lead to a rift within the founding

team. Because people wear lots of hats in startups, the sudden departure of a key

executive can doom a fledgling organization. This makes it imperative to structure

agreements so that the founders and key hires are treated fairly and that everyone's

interests are closely aligned with the success of the new venture.

9. Poor Pricing Strategy

The price is right?

The most common method for setting prices is to start at the unit cost and

then mark up the price to achieve a profit, so-called "cost-plus" pricing.

Unfortunately, cost has little to do with how a product or service is valued

by customers, which can lead to systematic under pricing.

Even worse, cost-based pricing can lead to prices that are greater than what the market

will bear. Because unit cost is related to sales volume, high prices lead to fewer sales,

which in turn increase unit cost, leading to a further round of price increases.

10. Growing too fast

What goes up?

Growth is considered the hallmark of business success, but

uncontrolled growth can—and does—kill entrepreneurial companies

for two primary reasons. The first is that businesses need systems

and infrastructure to scale properly, but few invest the time and effort

to lay the foundations for growth in those first hectic years. That's too bad, because

things tend to spin out of control when you put the pedal down. This can be especially

problematic for companies that receive a large infusion of outside capital. It's the

equivalent of trying to break the land speed record by strapping a jet engine onto a soap

box racer. Don't be surprised when the wheels come off.

The second reason is that top-line growth requires additional investments in fixed assets

(warehouses, machinery, trucks, etc.) and working capital (inventory, accounts

receivable, etc.). At controlled rates of growth, companies are able to finance

incremental sales through internal cash flow. Hypergrowth, on the other hand, can suck

up large amounts of cash, forcing businesses deep into debt or bringing the whole

enterprise to a screeching halt. Many times, owners are not even aware of the

impending collapse, because they focus on profitability (as depicted on the income

statement) rather than cash flow. Never forget that cash is the lifeblood of your business!

 Entrepreneurial Success

Factors affecting entrepreneurial success:

What are the critical factors that can make an entrepreneur to become a successful?

This is a subject of research and analysis of many professionals and institutions. It is

very possible that we cannot  expect to have an entrepreneur with all characteristics that

make them successful. But, the combination of the most important factors can help you

to build and manage successful business.

15 Entrepreneurial Success Factors

The most critical and most important factors that can make an entrepreneur to become a

successful are:

Willingness to take action. This is the first and most important factor for each potential

and current entrepreneur. All other factors presented below, won’t have importance if he

or she didn’t take a real action.

Knowledge. They must have superior knowledge about business issues for business

that they start.

Creativity. They must have creativity to be unique and continuously improves business.

Skills. Each entrepreneur and each business need different entrepreneurial skills that in

some cases can be crucial for business success.

Intelligence. They must be intelligent to manage all possible situations and to solve the

hardest problems that will be a constant in business life.

Patience. They must be patient and to continue after losing the first battle, because the

war is not finished. It’s only the beginning.

Persistence. Persistence simply is a refusal to give up from something, or ability to keep

your actions against your personal feelings that you’re not ready for such actions.

Feelings and motivation didn’t produce results, but the action is something that will

produce it.

Teamwork. Nobody can achieve anything alone so this is true also for an entrepreneur

because they’re not a “Superman”. They must be team players for their and business

success.

Calculated risk. This is truly one of the most important questions: did they take the risk?

Yes, each business startup is in some level risky. However, more important is how a

successful entrepreneur takes a risk? The word calculated risk is the most appropriate

word for this feature.

Self-Confidence. Self-confidence is a really important and key factor. I think that

nobody would be an entrepreneur if don’t have self-confidence that he knows how to

start and manage their own business.

Experience. Sometimes experience is in category not must have as a factor, but it is

something that will increase business potential energy. They must employ all present

and previous experience they had into the business.

Talent. Talent is something inborn in an entrepreneur. Sometimes talent can be

replaced with knowledge.

Honesty. Honesty is important in every case, but sometimes honesty, being real can be

the biggest enemy of an entrepreneur in some complex conditions.

Connections. More connection the more possibilities for building a successful business.

Luck. Luck is a psychological factor. Some people can say that they don’t have a luck.

And indeed there are some “lucky people” who just accidentally found the right place at

the right time. However, it is a small percentage and cannot be included as a serious

factor for success.

Why The Number One is most Important Factor?

First, all the factors listed without a willingness to take action represents a potential of an

entrepreneur. Actually, this is the business potential energy stored in them that can and

should be converted into kinetic energy, which will perform the job.

What would be the Profile of a Successful Entrepreneur?

Profile of an Entrepreneur –

Ready to take actions build upon a knowledge and creativity while combining the

skills and intelligence, and is patient and persistent, have the ability to work in

teams, take risks, but not insane risk and have self-confidence and experience, while

it’s honest, sometimes they are lucky, and they have great connections that can help

doing business.

Anyway, all factors or characteristics are important because they’ll increase business

potential energy of entrepreneurs, and thus the overall business potential energy.

Environmental dynamics and change: Creating an Entrepreneurial Environment

What We Learned

When economic developers talk about a positive environment for economic

development, they are often talking about the business climate in the traditional sense –

are there sites in the industrial park, is the community “business friendly,” are there

roads and sewers for new factories? When we talk about an entrepreneurial

environment, we’re talking about much more.

There are three components of this environment that entrepreneurs need to address:

Culture – Awareness of the importance of entrepreneurs to the local economy,

celebration of the value that entrepreneurs bring, openness to entrepreneurs who often

march to the beat of a different drummer, acceptance that failure is part of the

entrepreneurial process and a willingness to encourage and support entrepreneurs when

their first (or even second) venture doesn’t pan out

Infrastructure – Moving beyond the typical notion of infrastructure to include traditional

and non-traditional leadership, educational institutions like community colleges and

regional universities, cultural and recreational resources, quality schools, social

organizations that are diverse and emphasize creativity

Entrepreneurial support elements – Specific programs and initiatives designed to

provide a range of support to entrepreneurs of all types when and how they need it,

including service providers like the Chamber and Small Business Development Centers,

networking organizations and opportunities, financing programs, business incubation

services, mentoring and coaching, and youth entrepreneurship education in and outside

the schools.

Understanding the components of an entrepreneurial environment is just the first step in

helping your community become more entrepreneurial. You also have to consider your

readiness for entrepreneurship. As part of the Energizing Entrepreneurship institute, we

explored a Readiness Assessment tool that provides a useful way for you to think

about whether your community is ready to embrace entrepreneurship as a development

strategy.

This tool identifies six readiness factors to consider:

Openness to entrepreneurship as a development strategy

Commitment to balancing business attraction and support for entrepreneurs

Availability of entrepreneurship programs and support services

Willingness to invest in entrepreneurship development strategies

A leadership team committed to entrepreneurship

Willingness to work beyond town borders to tap resources and achieve success

Entrepreneurial Process:

Entrepreneurial process can be defined as a process of starting new venture. It involves all the functions, activities and actions associated with perceiving opportunities and enabling organizations to follow them.

 

(A) Identifying and evaluating opportunities

Identifying and evaluating opportunities is a very time consuming. Identification of opportunities is done by keeping in mind the fact that it should fit the personal skills and goals of entrepreneurs. Before identifying any efficient business opportunity, entrepreneurs need to consider the following:

Must collect the information about the resource base, where he/she is going to start a new business such as agriculture, forest and mines.

Must collect the information on opportunity identification, which means the sources from where he can acquire funds for starting a new business.

Must take the help of existing entrepreneurs in order to discuss the potential business opportunities.

Must take a thorough study of the organization, which are not performing well.

Must collect information on the availability of infrastructure such as power, water and transport.

Today, there are no formal mechanisms that can be used for identifying and evaluating opportunities. In order to get information related to opportunities, entrepreneurs basically depend upon following sources:

Managing Enterprise

Identifying and evaluating opportunities

Creating Business Plan

Identifying Resources

Members of distribution system

Consumer and business associates

Technical people and experts

After identifying the opportunities, it is the responsibility of the entrepreneurs to evaluate the opportunities. Evaluation of opportunities is a very complex tax and it allows entrepreneurs to assess, whether the specific product or service can satisfy the expectations of both entrepreneurs and consumers.

Evaluation of opportunities includes:

Assessing the length of opportunities

Real value of opportunities and perceived value of opportunities.

Determining the risks, rewards and advantages of the opportunity in the competitive environment.

- Risks and rewards can be determined on the basis of market size and time period available for creating a new venture.

- Opportunity assessment plan is also a very useful method that can be used for the evaluation of opportunities.

- Evaluation of opportunities helps in making decisions whether to act on an opportunity or not.

Opportunity assessment plan includes the following aspects: Product description

Assessment of opportunity

Description of all physical resources required for starting a new venture

Sources of financial capital

(B) Creating a Business Plan

Business can be described as a written document prepared by an entrepreneur to specify the details about internal and external elements required for setting up a new venture. Business plan can be considered as a combination of different type of functional plans such as:

Production Plan: It specifies the details related to the production of services or goods. Creating a production plan is a pre production activity and it is an integral part of the overall business plan. It is based on the forecasts made in terms quantity and quality requirements of the product.

Organizational Plan: It is a list activity that every individual of the organization has to perform. It contains the list of the work programs over the period of six months, a year or five years. It helps the organization in getting a clear view of the type of work that is to be performed.

Marketing Plan: It involves the task of creating plans for the marketing of new products, which an organization decides to manufacture. This plan provides

a method for distributing, promoting and pricing a product or service in the market.

Operations Plans: All business units include operation plan as an integral part of business plan. It is very useful in describing the flow of goods or services from the manufacturer to consumer. It can also be used by retailers, whole sellers and service providers to provide a sequence of steps required for the execution of a specific business transaction.

Financial Plan: It is also an important part of the business plan. This plan helps to identify and evaluate different type of potential investments opportunities and commitment required for setting up a new venture. It can also be used to clarify, whether the business plan is feasible or not.

Risk Assessment: Risk assessment is done to identify risks and alternative arrangements that can be used to meet the goals and objectives of a business unit. In the first step of risk assessment, the entrepreneur should identify the risks, which are associated with the set up of business venture. After identifying the risks, the entrepreneur should determine the ill affects of risks. After that entrepreneur should try to identify or develop a strategy that can be used for preventing and minimizing the scope of the risk.

Venture Description: Description of a venture provides the details about the product, services and operations of a newly set up venture. Description of venture is very useful for investors, since it provides the size and scope of business venture.

Industrial and Environment Analysis: Industrial & environmental analysis involves identifying and evaluating external factors that could impact the business plan. It is very useful for identifying trends and changes occurring in the national and international economies.

Following are the examples of external environmental factors:- Culture- Economy- Technology- Legal Concerns

(C) Identifying Resources

The third step in the process is the identification of resources. These resources may be financial resources or physical resources such as raw materials. The identification of resources starts with the appraisal of an entrepreneur’s present resources. While identifying resources, entrepreneurs must take sure of the amount and variety of resources required. Entrepreneurs must also evaluate the risk associated with inappropriate resources. Resources required by a growing enterprise can be classified in to the following two categories:

Tangible Resources: Tangible resources are those resources, which can be quantified and are visible. Tangible resources include financial resources, organizational resources, physical resources and technological resources.

Intangible Resources: Intangible resources are those resources, which are partially visible such as human resources, innovation resources and reputation resources.

The management of available resources is also essential for a growing enterprise. Management of resources involves identification, allocation and relocation of resources

in order to perform a specific task. Resources not only include raw materials or equipments but also the employees working in the organization and the place where it is located. The resources of an enterprise can ultimately lead to a strategic advantage for it if they possess four characteristics, that is, if these resources are available, rare, costly to imitate and non-substitutable.

(D) Managing an Enterprise: This is the last step of the entrepreneurial process. After identifying resources, it is the responsibility of the entrepreneur to implement them in an efficient manner. This phase also involves identifying and managing operational problems of the enterprise. In order to deal with the potential operational problems, most

of the entrepreneurs implement the process of establishing a control system in their enterprise. Control system allows the entrepreneurs to identify problems areas very quickly. Control system also provides a mechanism for resolving these problem areas.