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What is Entrepreneurship?

The definition of entrepreneurship has been debated among scholars, educators, researchers, and policy makers since the concept was first established in the early 1700s. The term entrepreneurship comes from the French verb entreprendre and the German word unternehmen, both means to undertake. Bygrave and Hofer in1891 defined the entrepreneurial process as involving all the functions, activities, and actions associated with perceiving of opportunities and creation of organizations to pursue them. Joseph Schumpeter introduced the modern definition of entrepreneurship in 1934. According to Schumpeter, the carrying out of new combinations we call enterprise, and the individuals whose function it is to carry them out we call entrepreneurs. Schumpeter tied entrepreneurship to the creation of five basic new combinations namely: introduction of a new product, introduction of a new method of production, opening of a new market, the conquest of a new source of supply and carrying out of a new organization of industry. Peter Drucker proposed that entrepreneurship is a practice. What this means is that entrepreneurship is not a state of being nor is it characterized by making planes that are not acted upon. Entrepreneurship begins with action, creation of new organization. This organization may or may not become self-sustaining and in fact, may never earn significant revenues. But, when individuals create a new organization, they have entered the entrepreneurship paradigm. The Supply of Entrepreneurship and Economic Development : British economists such as Adam Smith, David Ricardo, and John Stuart Mill briefly touched upon the concept of entrepreneurship, though they referred to it under the broad English term business management. Whereas the writings of Smith and Ricardo suggest that they undervalued the importance of entrepreneurship, Mill goes out of his way to stress the significance of entrepreneurship for economic growth. In his writings, Mill claims that entrepreneurship requires no ordinary skill, and he laments the fact that there is no good English equivalent word to encompass the specific meaning of the French term entrepreneur. The necessity of entrepreneurship for production was first formally recognized by Alfred Marshall in 1890. In his famous treatise Principles of Economics, Marshall asserts that there re four factors of production: land, labour, capital and organization. Organization is the coordinating factor, which brings the other factors together, and Marshall believed that entrepreneurship is driving element behind organization. By creatively organizing, entrepreneurs create new commodities or improve the plan of producing an old commodity. In order to do this, Marshall believed that entrepreneurs must have a thorough understanding about their industries, and they must be natural leaders. Additionally, Marshalls entrepreneurs must have the ability to foresee changes in supply and demand and be willing to act on such risky forecasts in the absence of complete information. Marshall also suggests that the skills associated with entrepreneurship are rare and limited in supply. He claims that the abilities of entrepreneur are so great and so numerous that very few people can exhibit them in all in a very high degree. Marshall, however, implies that people can be taught to acquire the abilities that are necessary to be an entrepreneur. Unfortunately, the opportunities for entrepreneurs are often limited by economic environment, which surrounds them. Additionally,

although entrepreneurs share some common abilities, all entrepreneurs are different, and their success depend on the economic situations in which they attempt their endeavors. One school of thought on entrepreneurship suggests that role of the entrepreneur is that of a riskbearer in the face of uncertainty and imperfect information. Knight claims that an entrepreneur will be able to bear the risk of a new venture if he believes that there is a significant chance of profits. Although many current theories on entrepreneurship agree that there is an inherent component of risk, the risk-bearer theory alone cannot explain why some individuals become entrepreneurs while others do not. Thus, in order to build a development model of entrepreneurship it is necessary to look at some of the other characteristics that help explain why some people are entrepreneurs; risk may be a factor, but it is not the only one. Modern school of thought claims that the role of the entrepreneur is that of an innovator; however, the definition of innovation is still widely debatable. Kirzner suggests that the process of innovation is actually of spontaneous undeliberate learning. Thus, the necessary characteristics of the entrepreneur is alertness, and no intrinsic skills-other than that of recognizing opportunities-are necessary. Other school of economists claims that entrepreneurs have special skills that enable them to participate in the process of innovation. Leibenstein claims that the dominant, necessary characteristics of entrepreneurs is that they are gap-fillers i.e. they have the ability to perceive where market fails and to develop new goods or processes that he market demands but which are not currently being supplied. Thus, entrepreneurs have the special ability to connect different markets and make up for market failures and deficiencies. Though the idea that entrepreneurs are innovators is largely acceptable, it can be difficult to apply this theory of entrepreneurship to less developed countries (LDCs). Often in LDCs, entrepreneurs are not truly innovators in the traditional sense of the word. Entrepreneurs in LDCs rarely produce brand new products: rather they imitate the products and production processes that have been invented elsewhere in the world (typically in developed countries). This process, which occurs in developed countries as well, is called creative imitation. Creative imitation takes place when when the imitators better understand how an innovation can be applied, used, or sold in their particular market niche (namely their own countries) than do the people who actually created or discovered the original innovation. Thus, the innovation process in LDCs is often that of imitating and adapting, instead of traditional notion of new product or process discovery and development. By combining the above thoughts it can be generalized that entrepreneurs are risk-bearers, coordinators and organizers, gap fillers, leaders, and innovators or creative imitators. Thus, by encouraging these qualities and abilities, governments can theoretically alter their countrys supply of domestic entrepreneurship. Basic Types of Entrepreneurship Apparently, it can be said that the starting point of entrepreneurship would define its type. The two types of entrepreneurship may be classified as: 1. Opportunity-based entrepreneurship- an entrepreneur perceives a business opportunity and chooses to pursue this as an active career choice.

2. Necessity-based entrepreneurship- an entrepreneur is left with no other viable option to earn a living. It is not the choice but compulsion, which makes him/her, choose entrepreneurship as a career. Creating Indian Entrepreneurs A recent Mckinsey & Company-Nasscom report estimates that India needs at least 8,000 new businesses to achieve its target of building a US$87 billion IT sector by 2008. Similarly, in the next 10 years, 110-130 million Indian citizens will be searching for jobs, including 80-100 million looking for their first jobs. This does not include disguised unemployment of over 50% among the 230 million employed in rural India. Since traditional large employers- including the government and the old economy player-may find it difficult to sustain this level of employment in future, it is entrepreneurs who will create these new jobs and opportunities. Todays knowledge based economy is fertile ground for entrepreneurs, in India. It is rightly believed that India has an extraordinary talent pool with virtually limitless potential to become entrepreneurs. Therefore, it is important to get committed to creating the right environment to develop successful entrepreneurs. To achieve this, India must focus on four areas. 1. Create the Right Environment for Success: Entrepreneurs should find it easy to start a business. To do so, most Indians would start slow with capital borrowed from family and friends, the CEO playing the role of salesman and strategist, a professional team assembled months or perhaps years after the business was created, and few, if any, external partners. Compare this with a start-up in Silicon Valley: a Venire Capitalist (VC) or angel investor would be brought in early on; a professional management team would drive the business; a multifunctional team would be assembled quickly; and partnerships would be explored early on to scale up the business. A major challenge for India is to create a handful of areas of excellence- the breeding ground where ideas grow into businesses. Fr example, Gurgaon and Hyderabad for remote services, or Bangalore for IT. One way of strengthening these areas is to consider the role of universities and educational institutions-places where excellence typically thrives. 2. Ensure that Entrepreneurs have access to the Right Skill: A survey conducted by McKinsey & Company last year revealed that most Indian start-up businesses face two skill gaps: entrepreneurial (how to manage business risks, build a team, identify an get funding) and functional (product development know-how, marketing skills, etc.) India can move toward ensuring that the curriculum at universities is modified to address todays changing business landscape, particularly in emerging markets, and to build centres of entrepreneurial excellence in institutes that will actively assist entrepreneurs. 3. Ensure that Entrepreneurs have access to Smart Capital: For a long time, Indian entrepreneurs have had little access to capital. It is true that in the last few years, several Venture Funds have entered the Indian Market. And, while the sector is still in infancy in India (with estimated total disbursement of less than US$0.5 billion in the year 2003), VCs are providing capital as well as critical knowledge and access to potential partners, suppliers, and clients across the globe. However, India

has only a few angel investors who support the idea in the early stages before VCs become involved. While associations such as TIE are seeking to bridge the gap by working at creating a TIE India Angel Forum, this is Indias third challenge creating a global support network of angelswilling to support young business. 4. Enable Networking and Exchange: Entrepreneurs learn from experience-theirs and that of others. The rapid pace of globalization and fast growth of Asian economies present tremendous opportunities and challenges for India. Through planning and focus, India can aspire to create a pool of entrepreneurs who will be the regions and the worlds-leaders of tomorrow. The Future of Entrepreneurship Both the Central Government and various State Governments are taking increased interest in promoting the growth of entrepreneurship. Individuals are being encouraged to form new businesses and are being provided such government support as tax incentives, buildings, roads, and a communication system to facilitate this creation process. The encouragement by the central and state governments should continue in future as more lawmakers are realizing that new enterprises create jobs and increase the economic output of the region. Every state government should develop its own innovative industrial strategies for fostering entrepreneurial activity and timely development of the technology of the area. The states should have their own state-sponsored venture funds, where a percentage of the funds has to invested in the ventures in the states. Societys support of entrepreneurship should also continue. This support is critical in providing both motivation and public support. A major factor in the development of this societal approval is the media. The media should play a powerful and constructive role by reporting on the general entrepreneurial spirit in the country highlighting specific success cases of this spirit in operation. Finally, large companies should show an interest in their special form of entrepreneurshipintrapreneurship-in the future. These companies will be increasingly interested in capitalizing on their Research & Development in the hyper competitive business environment today. Conclusion The definition of entrepreneurship has evolved over time as the worlds economic structure has changed and become more complex. Risk taking, innovation, and creation of wealth are the criteria that have been developed as the study of new business creations has evolved. The decision to start an entrepreneurial venture consists of several sequential steps (1) the decision to leave a present career or lifestyle. (2) the decision that an entrepreneurial venture is desirable ; and (3) the decision that both external and internal factors make new venture creation possible. There are both pushing and pulling influences active in the decision to leave a present career: the push of job dissatisfaction or even layoff, and the pull toward entrepreneurship of seeing an unfilled need in the market place. The desirability of starting ones own company is strongly influenced by culture, sub-culture, family, teachers, and peers. Any of these influences can functions

as a source of encouragement for entrepreneurship, with support ranging from government support that favour business to strong personal role models of family or friends, Beyond the stage of seeing entrepreneurship as a a good idea, the potential entrepreneur must possess or acquire the necessary education, management skills, and financial resources for launching the venture. The study of entrepreneurship has relevance today, not only because it helps entrepreneurs better fulfill their personal needs but because of the economic contribution of the new ventures. More than increasing national income by creating new jobs, entrepreneurship acts as a positive force in economic growth by serving as the bridge between innovation and market place. Although government gives great support to basic and applied research, it has ot had great success in translating the technological innovations to products or services. Although intrapreneurship offers a promise of marriage of those research capabilities and business skills that one expects from a large corporation, the results have not been spectacular. This leaves the entrepreneur, who frequently lacks both technical and business skills, to serve as the major link in the process of innovation development, and economic growth and revitalization. The study of entrepreneurship and education of potential entrepreneurs are essential parts of any attempt to strengthen this link so essential to a countrys economic well-being.

No matter where you are on this planet, entrepreneurship is always challenging but today I will be giving my view point which is an Indians point of view. How Entrepreneurship Challenges are different in India.

1. Family Challenges
Being in Kolkata (West Bengal) for more than 14 years now I know that Bengali people in general are more focused on doing a job compared to entrepreneurship. When I talk to them about entrepreneurship at time they take me lightly because of the fact that they think being from non-Bengali and especially Gujarati family means business is in my genes. At times I also get an answer that it is much easier to be an entrepreneur with my background than from a Bengali family background. It may look true from their point of view but let me tell you that it is that much more difficult to become and entrepreneur with business culture around. For Bengalis the challenging is convincing your parents why you are not willing to opt for a job and go for an entrepreneurship but then for Gujaratis and Marwaris family it is not only difficult to convince to opt for entrepreneurship but then very much more difficult on an ongoing basis as well. Convincing to opt for business over job is easy for Gujaratis but then for business you love is very very difficult. The first thing they will compare is Will you make more money in business of your choice or as a successor of family business. This is where it becomes almost impossible to convince that you can generate more cash with your passion than doing what your Dad is doing. The challenges are different but there are challenges. We were not born with silver spoon in our mouth.

2. Social Challenges
Family challenges are always at the top because that is what matter the most but at times social challenges also are very important. Let us say you and your friend graduated at the same time. You opted for entrepreneurship and your friend opted for a job. He now has a flat, car and what not because he could easily get those with a bank loan but you still have nothing to show off and this is where challenge comes. You should understand is that your friend opted for Udhar Ki Zindagi i.e. life on loan.

3. Technological Challenges
Indian education system lags too much from the Job industry as a whole but then it lags even more when it comes to online entrepreneurship. I am yet to see a course in India which talks about Search Engine Marketing, Affiliate marketing or even Blogging the sole idea of this blog. What this does is makes entrepreneurs life that much more difficult on technology front What technology would be ideal and how to use that technology effectively?

4. Financial Challenges
Financial challenges are a lot different in India especially for online entrepreneurs. When you are starting out as an entrepreneur you dont opt for venture funding but try to go with funding from small to medium business people. Many such non technical business people dont understand the online business models as a whole and so getting an initial business funding from them becomes challenging. The other option you can think of is loan but bank loan is not at all an option in India for new online entrepreneurs. The reason I say that is because for software and online business unless you are into business for 5 years you cannot apply for a bank loan.

5. Policy Challenges
Government is never encouraging for SMBs (Small and Medium Businesses) these days. See this, this, this I dont know why Indian Govt is taking so many major steps against small businesses but it looks like Govt dont believe that small business can change the face of the Indian economy on a large scale which is not at all true.

6. Team-ing Challenges
Indians and especially people in Kolkata are more inclined towards job in big companies than towards a partnership or even working in small start-ups. You can have the hardest time finding the right team of people to get yourself moving. I always had (and have) this problem to find the right balance of people to work with me.

7. Motivation and dedication

This is true for any entrepreneur irrespective of geography but I think I should include it in my list of challenges which is to keep yourself motivated for what you enjoy doing. At times we judge entrepreneurs by the amount of money they make and if they dont make piles of cash people tend to look at them as loser or insanely mad. It is this phase of entrepreneurship which is the toughest time to keep your motivation and dedication going.

Overcome the Top 10 Entrepreneur Challenges


When starting or running your own business, you'll face these entrepreneur challenges. Real entrepreneurs don't let that stop them. Now they won't even slow you down! Entrepreneurs face challenges from many sources... external threats may come from competitors, from the bank that turns you down for financing or the government agency that refuses your license application. Internal challenges are far more deadly to your success. The difference for entrepreneurs with ADHD, however, is that a slightly different approach may be necessary to overcome the same challenges other entrepreneurs face. In this article, we'll look at the top 10 entrepreneur challenges briefly, and then I'll share two essential strategies you must apply if you hope to overcome any entrepreneur challenge. Top 10 Entrepreneur Challenges These 10 challenges come up with my clients again and again. They aren't in order of importance, but ask any entrepreneur to list his or her most vexing challenges and I'll bet you'll find them on this list.

Paperwork: You hate doing it. You hate organizing it. You'd love to throw it out, but you can't decide what you can get rid of and what to keep. Delegation: You can't trust anyone to do it as well as you. You haven't practiced your delegation skills, it's no surprise when it doesn't go well, justifying your reluctance. Perfectionism: Your standards are so high no one can live up to them. Not even you. But perfectionism is motivated by fear. You can't be judged if you never finish. Forgetfulness: Poor working memory makes you forget what you're supposed to do. You can remember facts, but appointments? Commitments? Forget it. Impulsive Behavior: A person of action, you'd rather move than take time to think. But shooting first and asking questions later just leaves a lot of hole you have to fix. Projects: The trouble with projects, planning them, managing them and finishing them starts early. The business plan stops many would-be entrepreneurs before they start. Procrastination: With so many exciting things to do, boring but necessary tasks are the bane of every entrepreneur. Why do today what you can put off until tomorrow? Here's a secret strategy that can stop procrastination in it's tracks. Getting Organized: You're often inconsistent. Organized in some areas and disorganized in others, you can't seem to transfer the same skills from one area to another. Lack of Focus: You have so many brilliant ideas, each one "shinier" than the next, that your biggest challenge it to pick one and see it through from brainstorm to business.

Time Management: You are chronically late, overcommitted and still overpromising. You underestimate how long things will take and often scramble to catch up late into the night.

Overcoming Entrepreneur Challenges Faced with any entrepreneur challenge, your first instinct is probably to overreact. If you can't find a paper on your desk, your response is, "I have to reorganize my office!" Of course, because you don't have time to reorganize your office, nothing changes. Overcoming any of these entrepreneur challenges is going to require change. As an entrepreneur, changes you make will affect other people too.

Overcoming Procrastination Let Them See It Coming Big, dramatic changes always meet with resistance. All people resist change. Even you. If you want your life and your business to improve, you must overcome that resistance. Just saying that things might get better is not enough. You know life would be better if you organized your office. (Anything yet?) If someone came in and organized your office for you, you'd complain you couldn't find things anymore. When you make changes, you'll resist. When you make changes that affect other people, they'll resist. And you'll be surprised what can upset people. If you decide to improve your work-life balance by leaving the office at a more reasonable hour, you might be surprised at the reaction at home when you show up early for supper. If you disrupt people's routines, at work or at home, you'll meet with resistance. This is not to say you should continue to work late into the night. Just remember, you must be prepared for that resistance in order to succeed, but you can lessen that resistance if you warn people. Think through the changes you're planning. Who will it effect? Explain to your spouse that you've been spending too much time at work and you're going to come home a bit earlier so you can spend more time with the family. Ask how you can best fit it into the family's routine and give them a chance to adapt to the new situation. Take Baby Steps When you overreact to a challenge, take a moment. Ask yourself, "What is the smallest change I could make that would actually improve the situation?" Organize your desk? Can you go smaller? Could you clean off the top of your desk?

Next, ask yourself, "What daily routine would reinforce that change?" Could you use an inbox and make it a habit to empty it every morning with your first coffee? Choose an action that you can turn into a ritual. Solving any entrepreneur challenges takes work. Otherwise, they wouldn't be challenges. But if you make the necessary changes one small step at a time, building a series of routines and rituals that maintain the changes you've made, you'll succeed in the long run, and looking back, it will have seemed almost effortless.

You had a great idea, a well-drafted business plan, some cash to begin with, a talented team and
you managed to rake in more funds. Now, you are running your own business. So far, so good. But, are you equipped for the challenges that lie ahead? I share with you my entrepreneurial experience of six years in the form of seven daily challenges that every entrepreneur-in-action faces, more as a routine than an exception.

1. No rules protecting employers There are rules, the world over, upholding the interests of employees. But there is little an employer can do, if at the receiving end. For example, if you discover that an employee has secured a job with your company by means of duplicate certificates or fake experience, all you can do is to ask them to leave with full pay. You hired him/her and it is solely your mistake! Similarly, there are instances where you hire someone at a very handsome package for a crucial position. But, by the time you train him/her to understand the responsibilities, you are gifted with such a beautifully crafted resignation that you wonder why the artist didn't try a hand at creative writing for Bollywood. What takes the cake is a situation where, on the second day of the month, you realise a person performing a highly skilled task decides to quit for a better paying job and doesn't have time for the handover. Be prepared for such situations and ensure there are some multi-taskers in the organisation to come to the rescue. 2. Global competition You submit a proposal for a requirement to a prospective customer, after taking into account the cost of your employee, his allowance, certain percentage of the money that has gone into building the product and a little margin. You do the best costing possible, as you want to penetrate this account and have a long-term association with the client. You'd think your price would be best, considering the Indian advantage of labour, materials, etc. Then comes the bid award day and the contract goes to some other company in some part of the world, ready to deliver what you promised, in a similar aggressive timeframe, similar reference customer base, at half the price you quoted. Yes, you heard it right -- half the price! This is a reality you have to live with. So, when you submit a proposal to one of your prospects, keep in mind not only your country, but also the rest of the world. After all, the world is a global village now, thanks to the Internet revolution. 3. Changes around the globe You have made some profit, and plan to use it to fuel your global expansion. You hire the best man,

train him and get him stationed in another country to give a local presence and comfort factor to your prospective customers. You are burning a lot of money on a daily basis with a hope that, sooner or later, you will start getting returns. But, something happens and you have to shut shop. No questions asked. The reasons vary, from political changes in the target country to a failed feasibility study. Now, considering you are not a topnotch multinational able to hire a big consulting company to advise you, be prepared to burn some money here and there. There are similar situations, for example, in my company, which depends heavily on the Middle East market -- all our support departments (sales, pre-sales, recruitment, operations, etc) are idle for the entire month of Ramadan [ Images ] every year. Such changes have to be managed with a positive attitude. 4. Balance between projects and personnel Usually, with startups or in the early stages of expansion, you have a project but no one to execute it. And, if the founders are techies, you have no choice but to burn the midnight oil and finish it somehow. Most likely, if this is the first assignment with the customer, you cannot afford to compromise on quality -- after all, you are expecting bigger business from the same customer. Such an experience makes you wise enough to do some advance hiring the next time around and, guess what -- this time, the opposite happens. The project that was supposed to come in yesterday now lingers for months. Every time you pay those salaries, you think, 'Did I make the right decision? Am I doing justice to my investors' money?' Over time, you will learn to balance the two situations by pitching for regular work to help you tide over. 5. Delayed payments You finished the work as planned and it is now time to collect payment. You have made plenty of plans for that money, from hiring more people in sales, to acquiring another office, to investing in a new idea. But, for no apparent reason, the money is delayed, especially if you are dealing with a large customer. The only thing you hear is 'Sorry, it is just a procedural delay', or 'You will receive your payment soon.' But nobody knows when. So, how do you pay your employees and vendors? This, I must confess, is one of the toughest parts of being an entrepreneur. The only option you have is to forego your salary. In fact, pull out all your savings and put them in the company to bridge the gap. If still does not suffice, go to the bank with some 'tangible' property. That means, if you have a flat, you mortgage it. In most cases, the family is not even made aware of this, because it is a short-term problem and you do not want to scare them. 6. Return to the investor So far, you may have heard stories of successful entrepreneurs becoming venture capitalists to help budding entrepreneurs. You may also have been advised not to be 'sticky' and to try and have a smaller pie of a bigger cake, rather than a bigger pie of a smaller cake. Sounds great! But, in reality, let's admit, these 'mother hen' entrepreneurs are successful because they are smart. They know how to grow their money and that is precisely the reason why they have so much money under their belt to manage. So, if you end up taking money from them, be prepared to answer many a difficult question on a daily basis. If you can't manage that, you are out -- of the very own company you built! Remember, a bigger pie of a small cake is any day better. 7. How society perceives you As an entrepreneur, I remember approaching a leading Indian bank [ Get Quote ] for a home loan, where I was rejected for being "self-employed." And, believe it or not, a software engineer working in my own company got his loan sanctioned. If you are an Indian, an entrepreneur and unmarried, I give

you my best wishes, because there is slim chance that a typical Indian middle-class parent will select you for his or her daughter.
You are perceived as a person without job security, unlike your classmates or ex-colleagues, who are sought after for being placed in well-known multinationals. Surprisingly though, if there is a natural calamity or any other cause needing attention, society expects successful entrepreneurs to donate generously, and they do. So, if you thought being entrepreneur is fascinating and fun, yes, it is, but it comes with its own set of problems. However, once you learn the ropes, you start enjoying the ride. Once an entrepreneur, always an entrepreneur.

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