Basics of Business and Entrepreneurship

Asian Centre for Entrepreneurial Initiatives

By Madhura M Chatrapathy,

Entrepreneurship is an enigmatic word and there are different perceptions from different angles, hence there are different definitions. For the purpose of the Facilitators which term refers to all those who are engaged in providing business development services, NGOs, entrepreneurship development agencies including Government agencies, trainers, business counselors and the like, we need to look it from two different perspectives. From the entrepreneur and enterprise perspective, entrepreneurship is the process of creating an enterprise by an entrepreneur. The other perspective being, entrepreneurship is also about the interventions through development designs in a larger process, at a macro level to create or development entrepreneurs. An enterprise is the medium through which the entrepreneur works. Entrepreneurship is a process that involved various actions to be undertaken, to establish an enterprise by an entrepreneur. Entrepreneurship = Entrepreneur + Enterprise

Entrepreneur Person

Entrepreneurship Process of Action

Enterprise Object

Three Dimensions of Entrepreneurship The 3 dimensions are Enterprise, Entrepreneur and Eco System or the business, social and cultural environment. An Enterprise is the medium through which the entrepreneur works in a given Eco system. Entrepreneurship development, in the larger context, is all about working with entrepreneur, enterprise and the eco-system in an integrated manner, not in isolation.

UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

Training, mentoring, counseling, peer group support, etc. Entrepreneur Enterprise

Tech inputs, infrastructure marketing, finance etc

Eco System

Policy advocacy, mechanisms for support, Sensitisation, learning partnerships, community support etc

ASCENTS The 3-E Synergetic approach

Entrepreneurship is called the engine of economy. While governments create the economic environment, it is the entrepreneurs who transform the economies of the country and the world. Entrepreneurship development among women has tremendous potential in economic empowerment of women and transforming social and economic contours of a community; nay, a nation. It is important to appreciate the fact that the complex process of creating an enterprise an entrepreneur set ups an enterprise in a given environment. These dimensions cannot be viewed in isolation. The three dimensions need to be assessed and meshed together i.e. there should be an integrated and synergetic approach to achieve the desired result. Key elements of fostering entrepreneurship development Training: Entrepreneurship Development Programme Enterprise Management Training Business plan-preparation Hand holding services to selected groups and individuals Project specific exposure and exchange Mentoring Fast-track product and /or service and specific industry-training and exposure o Entrepreneurship motivation training laboratory o o o o o o o
UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

Expert services (project related) o o o o o o o o o o o o o o o o Market research and data consultancy Special seminar and conferences Special address by experts of international repute Entrepreneurship education to technical students Business innovation guiding, consultancy and idea validation, Competition analysis etc. Preparing business plan, finance plan, research and development plan and marketing plan Technology with due diligence Incorporation and associated formalities Business support resources (accounting, law, banking, tax, etc.) planning and human resource Technology transfer. Product or services commercialization. Developing partnerships. Dynamic business plans updates. Protecting Intellectual Property. Obtaining patents and trade marks

Facilitating accelerators and facilitators o o o o o Resource support Capacity building Mentoring services Research and study opportunities Internship

Development training tools and designing of project and programmes Business counselling, coaching and mentoring (Business planning, technology, research and development, prototyping, marketing, finance, human resource development, external and internal branding, Corporate Best Practices, etc.). Networking and peer support

Fostering entrepreneurship Fostering entrepreneurship, particularly among women, means encouraging, cultivating, advancing and furthering needs multi disciplinary and convergent approach. Motivation and enabling have a symbiotic relationship, without enabling processes and ecosystem motivation may become a futile exercise.

UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

Motivation + Enabling = Empowerment 1 Introductory or awareness programmes are held to motivate men and women to take to entrepreneurship with fan fare. Rosy pictures of facilities and support available from various agencies are highlighted. Many get motivated, without knowing where to begin and how to begin they can get frustrated and give up the whole idea. It is important that enabling mechanisms are put in place before motivational programmes are introduced Gender Concerns One of the key concerns, when we work with women, the facilitators tend, generally, to take a weakness focused approach rather than taking a Strengths realized approach. While there must an understanding of weak areas so as to over come the problem and to work through the challenge, repeated reinforcing of the weakness and underscoring it, women are likely accept this as their destiny, tend to further feel helpless. Instead, working with a focus on their strengths and high lighting their strengths truly helps in their empowerment. To meet the changing demands of the new economy, it is important to revitalize each of these dimensions - the eco- system or the business and economic environment, the entrepreneur, the prime mover of business and the enterprise that gets created in the given environment. Gender and its ramification must be taken into account in both planning and implementation of such development initiatives. Women entrepreneurs Based on the general concept of entrepreneurship, women entrepreneurs may be defined as a woman or group of women who initiate organise and run a business enterprise. This definition is based on womens participation in equity. Accordingly, a woman entrepreneur is defined as an enterprise owned and controlled by a women having a minimum financial interest of 51 percent of the capital. In nutshell, women entrepreneurs are those women who think of a business enterprise, initiate it, organise and combine the factors of production, operating the enterprise and take risks and handle economic uncertainty involved in running a business enterprise.2 Women entrepreneurs make a substantial contribution to national economies through their participation in start-ups and their growth in informal businesses. However, like an under-developed country, women too missed the opportunities of the Industrial Revolution because of factors such as lack of freedom in decision making, no or no control over resources, complete lack of or less of education, and often male domination.

1 2

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Source : Facilitators Handbook for Entrepreneurship for Rural Women APCTT (UNESCSAP) Source: Ramkishen entrepreneurship bms sem vi

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

Entrepreneurship is increasingly perceived as one of the most effective paths for social and economic empowerment. The Entrepreneur The much clichd question Are the entrepreneurs born or made, nature or nurture? From the several studies and researches carried out since David MacLlands study on Achievement Motivation some key traits and competencies are identified in entrepreneurs, as most desired. Though there psychometric tools for measuring these traits or attitudes, facilitators may not get to use them. It is important to understand these important criteria while working with the entrepreneurs. 1. Initiative: Takes action that go beyond job requirements or the demands of the situation. Does things before being asked or forced to by events. Acts to extend the business into new areas, products, or services. 2. Seeks and Acts on Opportunities: Look for and takes action on opportunities. Seeks and acts on opportunities (Business, educational or personal growth) Seizes unusual opportunities to obtain financing equipment, land, work space, or assistance. 3. Persistence : Takes repeated action to overcome obstacle that get in the way of reaching goals Takes repeated or different actions to overcome obstacle. Takes action in face of a significant obstacle. 4. Information seeking: Takes action on own to get information to help reach objectives or clarify problems. Seeks and acts on opportunities (Business, educational or personal growth) Seizes unusual opportunities to obtain financing equipment, land, work space, or assistance. 5. Concern for High Quality of Work: Acts to do things that meet or beat existing standards of excellence. States a desire to produce work of high quality. Compares own work or own companys work favourably to that of others. 6. Commitment to Work Contract: Places the highest priority on getting a job completed. Makes a personal sacrifice or expends extraordinary effort to complete a job. Accepts full responsibility for problems in completing a job for others. Pitches in with workers or works in their place to get the job done.
UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

Express a concern for satisfying the customer.

7. Efficiency Orientation: Find ways to do things faster or with fewer resources or at a lower cost. Looks for or finds ways to do things faster or at less cost. Uses information or business tools in improve efficiency. Expresses concern about costs vs. benefits of some improvement, change, or course of action. 8. Systematic Planning: Develops and uses logical, step-by step plans to reach goals. Plans by breaking a large task down into sub tasks. Develops plans that anticipate obstacles. Evaluates alternatives. Takes a logical and systematic approach to activities. 9. Problem Solving: Identifies new and potentially unique ideas to reach goals. Switches to an alternative strategy to reach a goal. Generate new ideas or innovative solutions. 10. Self-Confidence: Has a strong belief in self and own abilities. Express confidence in own ability to complete a task or meet a challenge. Sticks with own judgment in the face or opposition or early lack of success. Does something that the entrepreneur perceives as risky. 11. Assertiveness: Confronts problems and issues with others directly. Confronts problems with others directly. Tells others what they have to do. Reprimands or disciplines those failing to perform as expected. 12. Persuasion : Successfully persuades others Convinces someone to buy a product or service. Convince someone to provide financing Convinces someone to do something else that he would like that person to do. Asserts own competence, reliability, or other personal or company qualities. Asserts strong confidence in own companys or organizations products or services. 13. Use of Influence Strategies: Uses variety of strategies to affect others. Acts to develop business contacts. Uses influential people as agents to accomplish own objectives. Selectively limits the Information given to others. Uses a strategy to influence or persuade others.
UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

The Enterprise Enterprise is all about creating a product or service to satisfy a customer need. The MANTRA or Basics for success in business is understanding and appreciating the customer and his or her needs. Another interesting way of remembering that customer comes first, is to understand that in BUSINESS - U comes first, U comes before I. (U here means the customer) U is acts I (it is pronounced bizness), I is silent. (I here is the entrepreneur) 3 corners of Enterprise The three corners of the enterprise are product / service, market and technology, not necessarily in that order.

Technology

Product/ Service

Market

Technology may produce an innovative product and the entrepreneur may find a market for it. Mobile telephony for instance, now being used as M- money. The entrepreneur may see the market potential for an innovative product or service and source technology to make the product or provide the service first personal CD player now iPod. A business or an enterprise is defined as an undertaking engaged in production and delivery of goods and services in return for a profit. The primary purpose of enterprise profit which means there is a profit motive. The quantum of profit is as important as profit! There is a cost for everything. Nothing comes free to the enterprise, so the enterprise must also get paid in tangibles or intangibles, for what the enterprise does. Price is what a consumer is perceives as the value of service or product that is offered. However, it is the entrepreneur who sells the value to the customer.

UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

Cost

Price

Profit

Its obvious that the entrepreneur should maximize the profit by minimizing costs and finding optimizing the price.
INNOVATION /INVESTMEN T

RISK

REWARD

Innovation is the key in creating a product or service to meet the customer need. An entrepreneur investments in a variety resources, adds value and values to the product and services through innovation. Innovation is different from invention. It can be said that innovation is what an entrepreneur makes. Innovation is the attitude to find better things for the customer and better ways of doing things. It is an attitude to availing every opportunity and making a business sense of every opportunity. Again take the instance of mobile telephone it was an invention, all other features like radio, camera etc are innovations, value additions. Innovation must be backed by courage to experiment with ideas and the conviction to over come challenges and risk that go without. Unless risk is taken no reward can be found. Drive for Growth
UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

Growth orientation is one of the important criteria for a healthy enterprise as much as successful enterprise. In business growth is imperative. Business must grow or else it will perish for the simple reason costs of the business always increase over a period of time that can only be offset by growth. With Growth come other advantages of scale, size and image, apart from attracting investments. In the context women often it is found that the enterprise is small and there is not a strong drive for growth. The reasons are manifold one is succeeding in setting up a business and taking it to sustenance level is a process of self actualization. The other reasons range from fear of success, fear of neglecting of family, there being no successor and the perception big business is not for women etc. An enterprise can grow in a number of ways: Expansion of capacity: One can make more of the same product, and satisfy a larger market. Modification: One can make changes in the existing product to satisfy a better market, or to catch a new market. Diversification: One can make a totally new product, to take advantages of the strengths that one has built up. Diversification can be in the following manners: Backward or forward integration: One can make either the raw materials they need for the present product, or they make a new product using the present product as a raw material. New product based on existing machinery and technology. New product based on existing and allied markets and distribution channels. New products based on new uses for the existing raw materials. New products based on the management competence acquired / built up over a period of time.

Outsourcing: Achieving of the above through outsourcing, which is becoming a common practice in a globalised era. Conversely, offer the expertise and the facility for larger company to process their product in an expanded scale. The entrepreneur has the choice of deciding which route to take in her growth plans. In each of the above cases, she will need to look carefully at the potential markets for the existing or new products, the technology needed, the skills needed, and the money needed. In short, it would be as if she is becoming an entrepreneur all over again, but with the advantage that she knows so much more than before!

UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

In the process of growth, however, the business would be at a much higher level. The controls, technology, the manpower needs and skills and the marketing need to be more deeply thought out, and the entrepreneur may, if she likes, also be able to look at doing research and development work on her own to develop new products, rather than depending on others for technology. The entrepreneur must keep in mind the objectives of growth when she starts active preparations for growth: Why growth Where to grow When to grow How much (volume) to grow What to do to grow

These key questions will keep the entrepreneur looking in the right directions. The facilitator Development of entrepreneurship among women requires the constant support services of a person who can encourage, guide the women, provide assistance and support to solve their problems (on their own as far as possible), and bolster their morale and confidence. Such a person may not be a qualified trainer, but is a facilitator, bringing in other experienced people if necessary to provide the right support and guidance. As such all those involved in the process of facilitation are considered as Facilitators. It is assumed that the facilitator is a person with a fair amount of experience of working in the economic development field and is gender sensitive. He/she is person with some understanding of the concepts of adult learning. One has to bear in mind that A Facilitator is A good counselor, A provider of support to the entrepreneurs. A person who empathises with women. A person who creates a friendly atmosphere for women to feel free to share their problems and seek advice. A person who allows the learners to proceed at his or her own pace. A Facilitator Is Not A lecturer or an advisor One who is condescending A person who sympathises
UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

One who is judgmental and evaluates One whose intention is only to finish the programme

The role of the facilitators and entrepreneurship trainers and champions is crucial for hand holding, trouble shooting and confidence building, particularly for women entrepreneurs .Entrepreneurship development is a challenging task. In spite of the efforts of the entrepreneur, there are times when the problems seem insurmountable, and despair seems to be just around the corner. It is at such times the facilitator has to be most supportive and sustain the confidence of the woman. They need stout champions to back up their initiative. Outcome and out look It can be said the outcome is the result of the outlook, perceptions. If there is mixed up perception or confusion in understanding the difference between Entrepreneurship, SelfEmployment and Income Generation Activities, which are often used inter-changeably in the economic development area the outcome will not be long lasting and impact making. Is it Entrepreneurship or Self-Employment or Income Generation? It is important to have clarity and know the difference between three common terms used for womens economic development activities. Although there are a lot of commonalties among these concepts, it is important to appreciate the difference. An income generating activity is often part time and is practiced for raising additional income. They are usually supported by funding from various sources, and do not tend to be self-sufficient. Self-employment refers to full time involvement in ones occupation, in which one may or may not have to take any risk, to mobilise inputs and other resources to organise total production or to market the product and services. Entrepreneurship involves strong use of business skills, and is largely market oriented. It also involves employment of at least one other people, and managing them is one of the important factor in enterprise management. All entrepreneurs are self-employed and income generating persons, but all selfemployed and income generating persons are not entrepreneurs. So also all self-employed persons are income-generating persons, but all income generating persons are not selfemployed persons. In terms of programme approach, the major differences in the three terms could be seen as below
UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

Self-employment Entrepreneurship Income from ones own Income from Profit input Partial employment Full time employment Full time employment Usually collective usually not collective Individual, partners, private limited, group Managed by NGOs or Self Sometimes part of Self Help Managed by the owners, Help Groups Group partners, etc. Most common development Fairly common Uncommon development activity development activity activity Programs stop at skill Mainly artisan skills used Needs more complex skills training Group employment Employment for self only Employs more than one person Seldom results in real Not growth oriented Economic growth oriented income generation; lasts as through value addition long as the grant Low investment Low investment Investment may be low or high The facilitators Those who facilitate the process of developing an entrepreneur or creating enabling environments and mechanisms for entrepreneurship development are the facilitators or the champions of entrepreneurship who play a vital role in promoting and nurturing entrepreneurs. Entrepreneurship development is a complex phenomenon and these facilitators and champions can make the difference in the entire process.

Income generating Supplementary income

UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia

Reference:
Facilitators Handbook on Entrepreneurship Rural Women 1995 UN-ESCAP APCTT Madhura Chatrapathy, 1988 Gender Status in Industry, SAARC Seminar on Women in Industry Madhura Chatrapathy, 1988 Effective Stimulus key to Entrepreneurship Development : role of Entrepreneurs organisation, SAARC Seminar on Gender in Industry Madhura Chatrapathy, 2007 Handbook on Group Enterprise and Exports, an ASCENT publication A1an L. Carsrud, K. Olm and R. Ahegren, "Some Observations on Female Entrepreneurs and Female MBA Students," Working paper #84/85-4-32 (Austin, TX: University of Texas, Ramkishen entrepreneurship bms sem vi

UN-ESCAP Regional Training Workshop on Entrepreneurship and e-Business

Development for Women Cooperatives, 27-30 November 2007, Bali, Indonesia