Entrepreneurship

A great choice
 Entrepreneur
• Any one who wants to work for himself or herself is an
Entrepreneur
• He or She is an ambitious leader who combines land,
labor and capital to often create or market new goods
and services
• Webster Dictionary defines Entrepreneur as one who
organizes, manages and assumes the risk of a
business or Enterprise.
• Entrepreneur originates from French word
Entreprendra which means “TO UNDERTAKE”
• Entrepreneur is one who generates an idea, nurtures it ,
implements it and responsible for risk and rewards
• An Entrepreneur is a person who has possession of
new enterprise, venture or idea and assumes
significant accountability for the inherent risk and
outcome.
 Why Entrepreneurship
It is one of the most rewarding, personal
journey you can take, yet hardest
•You control your destiny
•You answer to yourself
•You can legitimately claim “I MADE THIS”
•Be prepared for changes you cannot
imagine
 MYTHS OF
ENTRREPRENEURSHIP
• Entrepreneurs are born not made
• Entrepreneurs are academic and social misfit
• Entrepreneurs fit an ideal profile
• All you need is money to be an entrepreneur
• All you need is luck to be an entrepreneur
• A great idea is only recipe for success
• My best friend will be a great business partner
• Having no boss is a great fun
• Life will be much simpler
• I will definitely become success
• I will make lot of money
What makes Entrepreneur
ENTREPRENEURSHIP QUIZ

Contributed by:
Prof. Anjan Rai Chaudhuri,
Indian Institute of
Management, Calcutta
 WALL STREET

GUESS WHEN
WERE THEY
ABRAHAM LINCOLN ACTIVE ? CHARLES DARWIN

HENRY BESSEMER FLORENCE NIGHTINGALE KARL MARX

MANGAL PANDEY SEPOY MUTINY

GUESS WHEN ?
All of them were between 1850 - 1860

How is current day to day

existence different from
1860 ?
NONE OF THESE EXISTED

HOW DID THIS HAPPEN?

 HOW DID THIS HAPPEN?

HENRY WALT
THOMAS A. ESTEE
HENRY FORD DISNEY
EDISON LAUDER
HEINZ

•Wanted a better quality of life

•Had a vision of the future
•Experimented & Constantly Improved their offer
•Sought help from others
•Ignored negative views
•Not deterred by setbacks
• What is Common
among these people

*Background?

*Their approach?
 BACKGROUND

MONEY? STAN SHIH RICHARD BRANSON

EDUCATION? EDISON AMAR BOSE

RAY KROC
AGE? HENRY HEINZ

WORK EXPERIENCE? BILL GATES WALTON

HOW HAVE THEY BUILT SUCH
GREAT BUSINESS EMPIRES?

IS THERE A METHOD IN THEIR

MADNESS?
THE ENTREPRENEURSHIP PROCESS
(CAPTURING OPPORTUNITY WITHOUT OWNING RESOURCES)

ACQUIRING
SPOTTING
RESOURCES
OPPORTUNITY
CREATING &
IDENTIFYING MANAGING A
RESOURCES VENTURE
 WHAT ARE THE
REWARDS

OF BEING

AN ENTREPRENEUR?
THE REWARDS OF BEING AN
ENTREPRENEUR

 HIGH DEGREE OF INDEPENDENCE – FREEDOM

FROM CONSTRAINTS

 GET TO USE A VARIETY OF SKILLS AND TALENTS

 FREEDOM TO MAKE DECISIONS

 ACCOUNTABLE TO ONLY YOURSELF

 OPPORTUNITY TO TACKLE CHALLENGES

 FEELING OF ACHIEVEMENT AND PRIDE

 POTENTIAL FOR GREATER FINANCIAL REWARDS

 WHAT ARE THE

CHALLENGES FACED

BY AN ENTREPRENEUR?
THE CHALLENGES OF BEING AN
ENTREPRENEUR

 MUST BE COMFORTABLE WITH CHANGE AND

UNCERTAINTY
 MUST MAKE A BEWILDERING NUMBER OF
DECISIONS
 MAY FACE TOUGH ECONOMIC CHOICES
 MUST BE COMFORTABLE WITH TAKING RISKS
 NEED MANY DIFFERENT SKILLS AND TALENTS
 MUST BE COMFORTABLE WITH THE POTENTIAL
OF FAILURE
VINOD NARAYANA
KHOSLA MURTHY

•IZZAT
•MAZAA
•MATLAB

SUNIL AJIT
MITTAL BALAKRISHNAN
HOW DO YOU BOIL A FROG?
*PUT IT IN ORDINARY WATER
*HEAT IT SLOWLY
*IT DOES NOT REACT TO THE
CHANGE
*ULTIMATELY GETS BOILED

Entrepreneurs are not frogs

See opportunities in change
 CHANGES

Intermediaries

Demographic Technological
EconomicSuppliers Natural

Publics
Company

Political Social
Legal Cultural

Competitors
SO WHAT IS YOUR GREAT
BUSINESS IDEA?

SO WHAT IS YOUR GREAT

BUSINESS IDEA?
 The Entrepreneur must have
• Passion – Burning desire
• Prepare to succeed – Focus
• Create Value
• Manage risks
• Emotional comforts in ups & downs
• Staying power & perseverance
• Lead the way
• Look for people smarter than you for your team
 Entrepreneurship
Vs
Small Business
• Amount of wealth creation
• Speed of wealth creation
• Risk involve
• Innovation
Entrepreneurial Competencies
• Initiative
• See and act on opportunities
• Persistence
• Information seeking
• Concerned for quality of work
• Commitment to work contract
 Entrepreneurial Competencies
• Efficiency orientation
• Systematic planning including finance
• Problem solving
• Self confidence
• Assertiveness
• Use of influence strategy
• Monitoring
• Concern for employee welfare.
 Business idea & opportunity
recognition
• Brain storming
• Ideas are all around you.
• Examples of Jamshedji Tata,
Sunil Mittal & Karsan Bhai
Patel.
“Creativity is present in every one
and it emerges when we are
challenged to exercise it”
• Mr.Vinod Khosla, world’s leading venture
Capitalist says “Every Problem is an
opportunity, bigger the problem, bigger the
opportunity. No one pays to solve a non
problem.”
 Idea Vs Opportunitiy
• Idea is not an opportunity necessarily
• Idea is raw material for business
opportunity
• Idea put through analytical screen and
surviving becomes opportunity
 5 Questions to screen an Idea
• Is the market large or growing?
• Who are the customers? Are you solving their
problem.
• Who are your competitors? What is the
differentiate?
• How much better or cheaper you will be?
• Most important – Are you or your team suitable to
your task?
Remember - Hardly 1% of business opportunities put
up to Venture Capitalists are considered fit for
funding
10 Steps to a Rocking Business
1) Analyse your strengths &
weaknesses
2) Product/service design and
development
3) Scanning the environment –
customers, competition, location
4) Ownership – single, joint
10 Steps to a Rocking Business
5) Business map
6) Finance
7) Legal aspects
8) Trails – always start small
9) Marketing
10) Plot milestones
 Business Plan Basics
• Executive summary
• Company over view
• Market environment
• Marketing & Sales strategy
• Operations
• Financial plan
 IDEA EVALUATION
Validation of a Business
Opportunity
 A Word of Caution
• If you are fundamentally in a lousy business, you
will not get very far irrespective of the efforts and the
talent.

• No matter how talented you are and how much

capital you have, if you have not given your idea a
rigourous, critical examination before starting out,
you could be heading for a disaster.

• When you buy a car, you take it for a test ride. Why
not do the same for your idea?
 Some Interesting Statistics
• Most businesses fail in less than two years

• Fewer than one percent of the business plans

submitted to VCs get funded

• Business failures lead to huge “collateral damages”

• Failures are planned by lack of planning

 Top Level Issues
• Are both market and industry attractive?

• Does the opportunity offer compelling customer

benefits as well as sustainable advantage over other
solutions to the customer needs?

• Can the team deliver the results they seek and

promise to others?
 Important Insights…
• Markets and industries are not the same things

• A Market consists of a group of current and/or potential

customers having a willingness and ability to buy
products (goods and services) to satisfy a particular
class of wants and needs

• A market is a set of buyers (individuals, firms) and their

needs. Not to be confused with products

• Example: Businesspeople who get hungry between

meals during the workday – market for workplace snacks
 Important Insights…
• An Industry consists of sellers – typically organizations
– that offer a product or a class of products that are
similar and close substitutes

• Example for workplace snack industry – producer level

(salty snacks such as chips, candy, fresh fruits) or
distribution level (coin vending machine, coffee bars,
take-away joints)
 Important Insights
• “Space” or “Sector” are dubious words – they confuse market
and industry (Internet space, biotech space)

• Judgments about attractiveness of the market one proposes to

serve are very different from attractiveness of the industry in
which one plans to compete

• Both micro and macro level considerations are important –

markets and industries must be examined at both levels

• Keys to evaluating entrepreneurs or entrepreneurial teams are

not simply found in their resumes or in their entrepreneurial
character
 Market Analysis – Macro Level
• Overall market – size (number of customers, aggregate
money spent, number of usage occasions) (Secondary
data from trade publications, business press)
• Where is the market on the “S curve” – is it nascent,
growing or saturating (infer from historical data)
• Trends in broad categories – demographic, socio-
cultural, economic, technological, regulatory
• Hero Cycles, 1983 -- Population growth and
distribution, fuel efficiency, pollution norms, four stroke
engines (Fill it, shut it, forget it)
 Market Analysis – Micro Level
• Target segment benefits and attractiveness – customers buy
benefits, not products or features.
• Large market of entertainment – audio -- MP3 players, MP3
players in cars, home systems, memory sticks
• How large is the segment and how fast it is growing –
combination of primary and secondary data
• Who you would like to be your FIRST customer – can you
name him
• Does an entry in a segment facilitate lateral entry in other
segments -- Nike Shoes
 Industry Analysis – Macro Level
• Is it an attractive industry – certain industries are
perpetually sick and others are cyclical

• Does the industry as a whole have entry barriers,

economies of scale, technology lock-ins

• Every time an industry doubles its size, a new

structure for it emerges – consolidation or
disaggregation (hospital – basic and support
services)
 Industry Analysis – Micro Level
• Sustainable competitive advantage – How long will
your edge last ?

• IP Protection – patents, copyright, trade secrets

• Superior organizational processes that are difficult

to replicate

• Economically viable business model – availability of

finance for long term and working capital, contract
enforcement and revenue collection cycles
 Team Analysis
• Financers give as much importance to team as ideas.

• Accepted wisdom – Ideas come dime a dozen, who will

execute?

• Aspirations, motivation and propensity for risk taking

• Ability to execute on critical success factors (CSFs) – unique

to each industry market segment – better, cheaper, faster

• Connectedness up, down and across the value chain –

ability to move from Plan A to Plan B, identification of the
CSFs of the industry
 Entrepreneurship Cycle
i) Perceive, identify and evaluate
an opportunity
ii) Drawing up a business plan
iii) Marshalling resources
iv)Creating the enterprise
v) Consolidation and management
 In terms of venture
i) Preventure activities
ii) Start up/early stage
iii)Turn around (break even)
iv)Growth
v) Maturity
vi)Inputs for sustaining
 Planning the Project
It is a step by step process and general
planning framework will answer following:-
i) What is to be done?
ii)Why it is being done?
iii)Where will this be done?
iv)When will this be done?
v)Who will do it?
vi)How will it be done?
 The basic elements of Project
Plan
• Overview
• Background
• Approach
• Schedule
• Resource
• Staffing
• Monitoring
• Risks
 Sources of Finance during
Lifecycle:-
• Concept stage – Only his dream & probably
team
Sources – Family, Friends and Fools
MSME Schemes
• Prototype – Angel investor, banks, financial
institutions, HNI
• Roll Out – Venture capital Investor, large
corporate, banks
• Growth – Bank loans, private equity
• Maturity – IPO, merger and acquisitions
Govt. Support for Entrepreneurs
• Ministry for Micro, Small and Medium
Enterprises
* Micro entreprise – Investment up to
Rs.25 lakhs in plant and machinery
* Small Enterprise – Rs.25 lakhs to 5
crores
* Medium Enterprise – Rs.5 crores to 10
crores
• Small Industries Development Bank of
India (SIDBI)
 * Financial institution for promoting, financing
and development of industry in small scale
sector and to co-ordinate functions of
Institutions engaged in promotion and
financing the same.
• Government Institutions promoted Venture
Funds
• Various Government schemes for rural
entrepreneurship development
• MSME Development Institutes / District
Industries Centers / State Directorate of
industries / NSIC/State finance corporations
• Entrepreneurship Courses being run by
EDI,SISI,ITFT
• Various premier management Institutes
like IIM – Ahmadabad, Bangalore and
Kolkata
• Several other Management Institutes
• Business, Management Organizations like
FICCI, All India Management Association
• Udyami Helpline – Government Policy
entrepreneurial schemes, MSME Act and
Rules for setting up a unit.
 Some of the promising fields
today
• Mobile applications
• Niche segments in Web market
• Educational – Semi urban areas
• Alternate sources of energy
 USEFUL LINKS
• The Indus Entrepreneurs (www.tie.org)
• Headstart (www.headstart.in)
• National Entreprenewship Network (
www.nenonline.org)
• MSME (
http://msme.gov.in/msme_schemes.htm)
• EDI (www.ediindia.org)
• SIDBI (WWW.sidbi.in)

Contd..
• Indian Angel Network (
www.indianangelnetwork.com)
• iAccelerator (www.iaccelerator.org)
• Venture Capitalists
(www.ndeavorindia.org)