Entrepreneurship

Santanu Mukherjee

Module 1

Concepts Concepts and and Overviews Overviews

Learning Learning Objectives Objectives

What What

is entrepreneurship? are the motivations of

entrepreneurship?
Classifications Role

of entrepreneurs.

of government to promote

entrepreneurship.

IEM - Entrepreneurship - Santanu Mukherjee

Entrepreneur Entrepreneur
The

concept was first established in the 1700s - the meaning has evolved ever since; Entrepreneur is a French word and commonly used to define a person, who organizes and operates a business or businesses; To some economists, the entrepreneur is
One who is willing to bear the risk of a new venture if there is a significant chance for profit; Others emphasize the entrepreneurs role as an innovator who markets his/her innovation; Some other economists say that entrepreneurs develop new goods or processes that the market demands and are not currently being supplied.

IEM - Entrepreneurship - Santanu Mukherjee

What What is is Entrepreneurship? Entrepreneurship?

Entrepreneurship

is the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risks, and receiving the resulting rewards of monetary and personal satisfaction and independence (Bowen and Hisrich, 1986).

IEM - Entrepreneurship - Santanu Mukherjee

Entrepreneurship Entrepreneurship -- Remarks Remarks of of two two successful successful

Being

an entrepreneur and creating a new business venture is analogous to raising children it takes more time and effort than you ever imagine and it is extremely difficult and painful to get out of the situation. Thank goodness you cant easily divorce yourself from either situation. When people ask me if I like being in business, I usually respond: On days when there are more sales than problems, I love it; on days where there are more problems than sales, I wonder why I do it. Basically, I am in business because it gives me a good feeling about myself. You learn a lot about your capabilities by putting yourself on the line. Running a successful business is not only a financial risk, it is an emotional risk as well. I get a lot of satisfaction from having dared it- done it-and been successful.

IEM - Entrepreneurship - Santanu Mukherjee

What What Makes Makes a a Successful Successful Entrepreneur? Entrepreneur?

There

is no definitive profile. entrepreneurs

Successful

Come in various ages, income levels, gender, and race; They differ in education and experience; Research indicates that most successful entrepreneurs share certain personal attributes, including:
Creativity, Dedication, Determination, Passion; Self-confidence, and Smartness. Flexibility, Leadership,

IEM - Entrepreneurship - Santanu Mukherjee

What What Makes Makes a a Successful Successful Entrepreneur? Entrepreneur?

Creativity

is the spark

Drives the development of new products or services or ways to do business Its the push for innovation and improvement Its continuous learning, questioning, and thinking outside of prescribed formulas
Dedication

motivates the entrepreneur

Work hard - 12 hours a day or more, even seven days a week, especially in the beginning, to get the endeavor off the ground Planning and ideas must accompany hard work for success
Flexibility

Ability to move quickly in response to changing market needs; It is being true to a dream while also being mindful of market realities.

IEM - Entrepreneurship - Santanu Mukherjee

What What Makes Makes a a Successful Successful Entrepreneur? Entrepreneur?

Leadership

Ability to create rules and to set goals; Its the capacity to follow through to see that rules are followed and goals are accomplished.
Passion

Gets entrepreneurs started and keeps them there; Provides the ability to convince others to believe in the vision; It helps to stay focused and to get others to look at the plans.
Self-confidence

Comes from thorough planning, reduces uncertainty and the level of risk; Self-confidence gives the entrepreneur the ability to listen without being easily swayed or intimidated.
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What What Makes Makes a a Successful Successful Entrepreneur? Entrepreneur?

Smartness

Common sense coupled with knowledge or experience in a related business or endeavor; The former gives a person good instincts, the latter, expertise; Many people have smartness they dont recognize; Employment, education, and real life experiences all contribute to smarts.

IEM - Entrepreneurship - Santanu Mukherjee

What What Motivates Motivates an an Entrepreneur? Entrepreneur?

Internal

Factors

External

Factors

Strong desire to do something new; To be independent in Life; Make maximum use of technical / professional knowledge; Occupational experience background; Passionate about particular activity; Dissatisfaction with present job; Self-satisfaction.

Government grants & subsidiaries; To continue ancestor business; Financial assistance from Institutions; Availability of resources; Encouragement from big business houses; Availability of sick units on easy financial terms; Encouragement from family members role model in the family

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What What Motivates Motivates an an Entrepreneur? Entrepreneur?

Perhaps

a person has been laid off once or more; Sometimes a person is frustrated with his or her current job and doesnt see any better career prospects on the horizon; Some people are actually repulsed by the idea of working for someone else.

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What What Motivates Motivates an an Entrepreneur? Entrepreneur?

Some

people are attracted to entrepreneurship by its advantages

Be your own BOSS - Make decisions, choose who you want to work with, when you want to work with them and for what amount you work for. (CONTROL); You decide how to operate your business, conceptualize and design your setup and work exactly how you want your sales and operation flows to be. (CONTROL); Being an entrepreneur gives you the prospect of achieving significant financial payouts. (MONEY) - There is no cap to the amount to money you can earn; Freedom to decide your working hours, as well as what to pay and when to take vacations. (FREEDOM); More time to spend with your family and live the life that you want. (FREEDOM);
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Classifications Classifications of of Entrepreneurs Entrepreneurs

Danhof

classifies Entrepreneur into four types

Innovative entrepreneur
This category of entrepreneur is characterized by smell of innovativeness; They sense the opportunities for introduction of new ideas, new technology, discovering of new markets and creating new organizations; Can work only when certain level of development is already achieved and people look forward to change and improvement; Very much helpful for their country because they bring about a transformation in life style; Example: Steve Jobs the founder of iPod, Michael Dell, founder of Dell Computers.

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Classifications Classifications of of Entrepreneurs Entrepreneurs

Adoptive

or imitative entrepreneur:

Imitate the existing entrepreneur and set their enterprise in the same manner; Instead of innovation, may just adopt the technology and methods innovated by others; Suitable for under-developed countries for imitating the new combination of production already available in developed countries; Example: Walton BD. has introduced its motorbikes, refrigerators, televisions and other electronic appliances in Bangladesh not being the original inventor of those products.

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Classifications Classifications of of Entrepreneurs Entrepreneurs

Fabian

entrepreneurs: Who attributes preference

Customs; Religions; Traditions; Past habits; Being shy and lazy, they are very cautious to accept changes and they view changes with suspicion; They imitate only when it becomes perfectly clear that failure to do so would not result in a loss of the relative position in the enterprises; Example: Kodak, a company that happened to be the market leaders in producing analog cameras but they did not realize the change and the introduction of the Digicam.

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Classifications Classifications of of Entrepreneurs Entrepreneurs

Drone

entrepreneurs:

Such entrepreneurs are conservative or orthodox in outlook; They always feel comfortable with their old fashioned technology of production even though technologies have changed; They never like to get rid of their traditional business, traditional machineries and traditional system of business even at the cost of reduced returns; Example: Citycell Telecom Bangladesh, in spite of having knowledge about there market fall they have not yet changed there business policy.

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Classifications Classifications of of Entrepreneurs Entrepreneurs

Other

entrepreneurs

Solo-operator:
The shopkeepers are like the solo-operators; They operate there business without recruiting any men power and supply the capital alone.

Active partners:
The active partners are different partnership firms; The partners actively participate in the raising of funds as well as with the operation of the internal management.

Inventors:
The software developers are also an entrepreneur as they invent new products for the solution of the new problems.

Challengers:
The challengers always seek for the new opportunities in the market to invest.
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Classifications Classifications of of Entrepreneurs Entrepreneurs

Other

Entrepreneurs

Buyers:
The buyers can also be the entrepreneurs; They find out an established institution and they buy the maximum share of that particular institution; On 20 October 2006 the board of directors of Anglo-Dutch steelmaker Corus accepted a $7.6 billion takeover bid from Tata Steel, the Indian steel company, at 455 pence per share of Corus.

Life timers:
The life timers are those who operate the business developed by one and is operated by generation to generation.

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Intrapreneurship Intrapreneurship
A

person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation; Intrapreneurship is now known as the practice of a corporate management style that integrates risk-taking and innovation approaches, as well as the reward and motivational techniques, that are more traditionally thought of as being the province of entrepreneurship.

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Entrepreneur EntrepreneurVs VsIntrapreneur Intrapreneur

Entrepreneur
1. 2. Entrepreneur is employer Independent in operation 1. 2.

Intraprenuer
Intraprener is employee Depends on the organization to implement his ideas. Does not bear all the risk.

3.

Bears all the risk involved in enterprise.

3.

4.

Exhibits higher need for achievement.

4.

May not have high need for achievement

5.

Profit is the reward.

5.

Attractive salary, promotion & incentives are the reward. Should have some professional or technical qualification.

6.

May not have formal qualification.

6.

7.

Do not have any boundary for operations.

7.

He has to operate within the organisational policies. 20

IEM - Entrepreneurship - Santanu Mukherjee

Entrepreneurship Entrepreneurship -- Role Role of of Government Government

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Drivers Driversto to Create Create Vibrant Vibrant Entrepreneurial EntrepreneurialEcosystem Ecosystem

Catalytic

government policy and regulatory framework

Facilitate investments
Recognition and promotion of early-stage investments, and; Angel investors, venture and seed funds, and impact investors through development of appropriate policy measures and fiscal incentives.

Enhance and scale-up venture incubation programs

Programs designed to support the successful development of entrepreneurial companies through an array of business support in terms of resources and services
Help with business basics; Marketing assistance; High speed internets; Access to bank loans, loan funds and guarantee programs; Technology commercialization assistance.

Source: Government of India Planning Commission, New Delhi, 2012

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Drivers Driversto to Create Create Vibrant Vibrant Entrepreneurial EntrepreneurialEcosystem Ecosystem

Ease

entrepreneurial activity

Governments at all levels (central, state, and local) - reduce transaction time & costs through measures i.e. single-window clearance and access to well developed industrial clusters
Software Technology Parks of India (STPI) model could be emulated The STPI scheme provides various benefits to the registered units i.e. 100% foreign equity, tax incentives, duty free import, duty free indigenous procurement etc. Easy

exits for investors

Policy framework for easier exits to encourage early stage investments by Angels and others
Provide appropriate fiscal incentive on capital gains to Angels and other early stage investors
Source: Government of India Planning Commission, New Delhi, 2012

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Drivers Driversto to Create Create Vibrant VibrantEntrepreneurial EntrepreneurialEcosystem Ecosystem

Establish expeditious procedures for closing of businesses

Complexity of closing down a business is a disincentive to set up a business in the first place; Ecosystem must recognize that business ventures fail and such failure is neither a stigma nor a constraint on future entrepreneurial activity.

Easy access to equity capital and debt Remove regulatory hurdles that inhibit domestic fund raising
Permit pension funds, insurance funds and provident funds to invest in earlystage venture funds could significantly improve capital flows; Special incentives i.e. tax credits could be provided to HNIs, corporate and institutions that invest in early stage venture funds or to incubators and to angel investors; Banks must also be encouraged to invest in early-stage venture capital funds.
Source: Government of India Planning Commission, New Delhi, 2012

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Drivers Driversto to Create Create Vibrant VibrantEntrepreneurial EntrepreneurialEcosystem Ecosystem

Easy

access to equity capital and debt

Government could establish a fund-of-funds (FOF) to seed other early stage venture funds
Capital from other sources (domestic and foreign) can be raised thereby creating a multiplier effect Develop and scale-up debt offerings A debt is created when a creditor agrees to lend a sum of assets to a debtor; Usually granted with expected repayment; in modern society, in most cases, this includes repayment of the original sum, plus interest; Critical to meeting working capital requirements; Early stage ventures cannot meet lender requirements.
Source: Government of India Planning Commission, New Delhi, 2012

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Drivers Driversto to Create Create Vibrant VibrantEntrepreneurial EntrepreneurialEcosystem Ecosystem

Businesses as entrepreneurial hubs:

Greater engagement of established businesses with emerging ventures is needed
Private sector could participate in setting up and operating incubators in PPP; Such incubators would have access to high quality managerial and technical resources of the sponsoring private enterprise.

Industry bodies and chambers of commerce could drive greater collaboration between established and emerging businesses
Strategic collaboration to source collaboration and technology; Develop solutions and products tailored for emerging firms.

Source: Government of India Planning Commission, New Delhi, 2012

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Drivers Driversto to Create Create Vibrant VibrantEntrepreneurial EntrepreneurialEcosystem Ecosystem

Culture

and institutions encouraging entrepreneurship over careerism:

Ecosystem to encourage a culture of entrepreneurship risk taking ability, failure for tolerance Educational institute can greatly help through
Upgraded courses and programs on entrepreneurship; Promotion of innovation and commercialization; Engagement of entrepreneurs, angel investors, capitalists as faculty and mentors; Share success stories through TV and print media. and venture

Source: Government of India Planning Commission, New Delhi, 2012

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Drivers Driversto to Create Create Vibrant VibrantEntrepreneurial EntrepreneurialEcosystem Ecosystem

Adequate

and effective collaboration forums

A vibrant entrepreneurial ecosystem needs forums, virtual or physical, where all stakeholders can come together to share experience, expertise and develop symbiotic relationships
Develop online portals to
Provide comprehensive information to a new entrepreneur is highly valuable; Provide information on government policies and regulations; Provide means for virtual mentorship support.

Set up Innovation Labs (iLabs):

Develop a network of 15-20 iLabs that can serve as the focal points for collaboration across the region
Source: Government of India Planning Commission, New Delhi, 2012

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Thank Thank You You

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