ENTREPRENEUR

MEANING:

An entrepreneur is one of the important segments of

economic growth. Basically he is a person responsible for setting up a
business or an enterprise. In fact he is one who has the initiative, skill
for innovation and who looks for high achievements. He is a catalytic
agent of change and works for the good of people. He puts up new
green field projects that create wealth, open up many employment
opportunities and leads to the growth of other sectors.
The word ‘entrepreneur’ is derived from the French verb
entreprendre. It means “ to undertake”. In the early 16 th century, the
Frenchmen who organized and led military expeditions were referred
to as “entrepreneurs”, Around 1700 A.D., the term was used for
architects and contractors of public works.
The term “ entrepreneur” was applied to business initially by
the French economist, Caltillon, in the 18 th century, designate a
dealer who purchases the means of production for combining them
into marketable products. Another Frenchman J.B. Say, expanded
Cantillon’s ideas and conceptualized the entrepreneur as an organizer
of a business firm, central to its distributive and production
functions. Beyond stressing the entrepreneur’s importance to the
business, Say did little with his entrepreneurial analysis.
According to J.B.Say, an entrepreneur is the economic agent
who unties all means of production, the labour force of the one and
the capital or land of the other and who finds in the value of the
products his results from their employment, the reconstitution of the
entire capital that he utilizes and the value of the wages, the interest
and the rent which he pays as well as profit belonging to himself. He
emphasized the functions of co- ordination, organization and
supervision. Further, it can be said that the entrepreneur is an
organizer and speculator of a business enterprise. The entrepreneur
lifts economic resources out of an area of lower into an area of higher
productivity and greater.
The New Encyclopaedia Britannica considers an entrepreneur
as “ an individual who bears the risk of operating a business in the
face of uncertainty about the future condition.
As professor Jan Tin Bergen points out “ The best entrepreneur
in any developing country is not necessarily the man who uses much
capital, but rather the man who knows how to organize the
employment and training of his employees. Whoever concentrates on
this is rendering a much more important service to his country than
the man who uses huge capital.
 Joseph A. Schumpeter thus writes “ The entrepreneur in an
advanced economy is an individual who introduces something new in
the economy- a method of production not yet tested by experience in
the branch of manufacture concerned, a product with which
consumers are not yet familiar, a new source of raw material or of
new markets and the like’
Briefly, an entrepreneur is one who innovates, raises money,
assembles inputs, chooses managers and sets the organization going
with his ability to identify them. Innovation occurs through (1) the
introduction of a new quality in a product (2) a new product(3) a
discovery of a fresh demand and a fresh source of supply and (4) by
changes in the organization and management.

New Concept of Entrepreneur

New Concept of Entrepreneur – The term “entrepreneur” has been
defined as one who detects and evaluates a new situation in his
environment and directs the making of such adjustments in the
economic system as he deems necessary. He conceives of an
industrial enterprise for the purpose, displays considerable initiative,
grit and determination in bringing his project to fruition and in this
process, performs one or more of he following.
 Perceives opportunities for profitable investment
 Explores the prospects of starting such a manufacturing
enterprise
 Obtains necessary industrial licenses
 Arranges initial capital
 Provides personal guarantees to the financial institutions
 Promises to meet the shortfalls in the capital and
 Supplies technical know-how.

The term “ entrepreneur’ is to be understood in its totality and

not in a fabricated manner. The term “ entrepreneur’ can only be
understood with a bearing on economic, psychological, sociological
and cultural bearings. The social responsibility is essentially a part of
entrepreneurial outlook on life.

Fig:1 Basics of an Entrepreneur

ORGANISATION

INNOVATION
 URGE
RISK
SKILL
ENTERPRISE
VISION
GROWTH

MANAGEMENT

So, “Entrepreneurs are individuals motivated by a will for

power, special characteristics being an inherent capacity to select
correct answers,energy, will and mind to overcome fixed talents of
thoughts, and a capacity to withstand social opposition”.

Characteristics of an entrepreneur:
A successful entrepreneur must be a person with technical
competence, initiative, good judgement, intelligence, leadership
qualities, self confidence, energy, attitude, creativeness, fairness,
honesty, tactfulness and emotional stability.
Mental ability: Mental ability consists of intelligence and creative
thinking. An entrepreneur must be reasonably intelligent and should
have creative thinking and must be able to engage in the analysis of
various problems and situations in order to deal with them. The
entrepreneur should anticipate changes and must be able to study
the various situation under which decision have to be made.
Clear objectives: An entrepreneur should have a clear objectives as
to the exact nature of the goods to be produced and subsidiary
activitie to be undertaken. A successful entrepreneur may also have
the objective to establish the products, to make profit or to render
social service.
Business secrecy: An entrepreneur must be able to guard business
secrets. Leakage of business secrets to trade competitors is a serious
matter which should be carefully guarded against by an entrepreneur.
An entrepreneur should be able to make a proper selection of his
assistants.
Human relations ability: The most important personality traits
contributing to the success of an entrepreneur are emotional stability,
personal relations, consideration and tactfulness. An entrepreneur
must maintain good relations with his customers if he is to establish
relations that will encourage them to continue to patronize his
business. He must also maintain good relations with his employees if
he is to motivate them to perform their jobs at a high level of
efficiency. An entrepreneur who maintains good human relations with
customers, employees, suppliers, creditors and the community is
much more likely to succeed in his business than the individual who
does not practice good human relations. Human relations ability can
also be referred to as tactfulness.

Fig: 2 Characteristics of an Entrepreneur

ADMINISTRATIVE
ADMINISTRATIVE
ABILITY
TECHNICAL ABILITY
TECHNICAL ORGANISATION SKILL
ORGANISATION SKILL
KNOWLEDGE
KNOWLEDGE

EFFECTIVE
EFFECTIVE INTELLIGENCE
INTELLIGENCE
COMMUNICATION
COMMUNICATION

PUBLIC RELATIONS ENTREPRENEUR CREATIVITY

PUBLIC RELATIONS ENTREPRENEUR CREATIVITY

EMOTIONAL STABILITY INNOVATION

EMOTIONAL STABILITY INNOVATION

SOUND KNOWLEDGE CLEAR OBJECTIVE

SOUND KNOWLEDGE CLEAR OBJECTIVE

BUSINESS SECRECY
BUSINESS SECRECY

Communication ability: Communication ability is the ability to

communicate effectively. Good communication also means that both
the sender and the receiver understand each other and are being
understood. An entrepreneur who can effectively communicate with
customers, employees, suppliers and creditors will be more likely to
succeed than the entrepreneur who does not.
Technical knowledge: An entrepreneur must have a reasonable level
of technical knowledge. Technical knowledge is the one ability that
most people are able to acquire if they try hard enough.
 An entrepreneur who has a high level of administrative ability,
mental ability, human relation ability, communication ability and
technical knowledge stands a much better chance of success than his
counterpart who possesses low levels of these basic qualities.
Some key characteristics of a successful entrepreneur are:
Motivator: An entrepreneur must build a team, keep it motivated and
provide an environment for individual growth and career development.
Self confidence: Entrepreneurs must have belief in themselves and
the ability to achieve their goals.
Long term involvement: An entrepreneur must be committed to the
project with a time horizon of five to seven years. No ninety- day
wonders are allowed.
High energy level: Success of an entrepreneur demands the ability to
work long hours for sustained periods of time.
Persistent problem solver: An entrepreneur must have an intense
desire to complete a task or solve a problem. Creativity is an essential
ingredient.
Initiative: An entrepreneur must have initiative accepting personal
responsibility for actions and above all make good use of resource.
Goal setter: An entrepreneur must be able to set challenging but
realistic goals.
Modern risk taker: An entrepreneur must be a moderate risk taker
and learn from any failures.
These personal traits go a long way in making an
entrepreneur a successful man or woman.

CLASSIFICATION :
The entrepreneur have been broadly classified according to
the types of business, use of professional skill, motivation, growth and
stages of development are discussed below

A. Entrepreneur according to the type of business:

ACCORDING TO THE TYPE OF BUSINESS

BUSINESSENTREPRENEUR

TRADING ENTREPRENEUR

INDUSTRIAL ENTRPRENEUR

CORPORATE ENTREPRENEUR

AGRICULTURAL ENTREPRENEUR

RETAIL ENTREPRENEUR

SERVICE ENTREPRENEUR
Business entrepreneur: Business entrepreneurs are individuals who
conceive an idea for a new product or service and then create a
business to materialize their idea into reality.
Trading entrepreneur: Trading entrepreneur is one who undertakes
trading activities and is not concerned with the manufacturing work.
Industrial entrepreneur: Industrial entrepreneur is essentially a
manufacturer who identifies the potential needs of customers and
tailors a product or service to meet the marketing needs.
Corporate entrepreneur: Corporate entrepreneur is a person who
demonstrates his innovative skill in organizing and managing
corporate undertaking.
Agricultural entrepreneur: Agricultural entrepreneurs are those
entrepreneurs who undertake agricultural activities as raising and
marketing of crops, fertilizers and other inputs of agriculture.

B.Entrepreneur in technology:

ACCORDING TO THE USE OF TECHNOLOGY

TECHNICAL ENTREPRENEUR

NON TECHNICAL ENTRPRENEUR

PROFESSIONAL ENTREPRENEUR

HIGH TECH ENTREPRENEUR

LOW TECH ENTREPRENEUR

Technical entrepreneur: A technical entrepreneur is essentially

compared to a “craftman”.He concentrates more on production than
on marketing. He demonstrates his innovative capabilities in matter of
production of goods and rendering of services.
Non- technical entrepreneur: Non- technical entrepreneurs are
those who are not concerned with the technical aspects of the product
in which they deal. They are concerned only with developing
alternative marketing and distribution strategies to promote their
business.
Professional entrepreneur; Professional entrepreneur is a person
who is interested is establishing a business but does not have interest
in managing or operating it once it is established. Such an
entrepreneur is dynamic and he conceive new ideas to develop
alternative projects.
C.Entrepreneur and Motivation:

ACCORDING TO THE MOTIVATION

PURE ENTREPRENEUR

INDUCED ENTREPRENEUR

MOTIVATED ENTREPRENEUR

SPONTANEOUS ENTREPRENEUR

Pure Entrepreneur: A pure entrepreneur is an individual who is

motivated by psychological and economic rewards.
Induced entrepreneur: Induced entrepreneur is one who is induced
to take up an entrepreneurial task due to the policy measures of the
government that provides assistance, incentives, concessions and
necessary overhead facilities to start a venture.
Motivated entrepreneur: New entrepreneurs are motivated by the
desire for self fulfillment.
Spontaneous entrepreneur: These entrepreneurs start their
business by their natural talents.
D.Growth and entrepreneur:

ACCORDING TO THE GROWTH

GROWTH ENTREPRENEUR

SUPER GROWTH ENTREPRENEUR

Growth entrepreneur: Growth entrepreneurs are those who

necessarily take up a high growth industry which has substantial
growth prospects.
Super growth entrepreneur: Super growth entrepreneurs are those
who have shown enormous growth of performance in their venture.

E.Entrepreneur and stages of development

ACCORDING TO THE STAGES OF

DEVELOPMENT

FIRST GENERATION
ENTREPRENEUR

MODERN ENTREPRENEUR

CLASSICAL ENTREPRENEUR

First generation entrepreneur: A first generation entrepreneur is

one who starts an industrial unit by innovative skill.He is essentially
an innovator, combining different technologies to produce a
marketable product or service.
Classical entrepreneur: A classical entrepreneur is one who is
concerned with the customer and marketing needs through the
development of a self supporting venture.
ENTREPRENEURIAL DEVELOPMENT PROGRAMME (EDP) :
Entrepreneurial development is a process in which
persons are injected with motivational drives of achievement and in
sight to tackle uncertain and risky situations especially in business
undertakings. The process of entrepreneurial development focuses on
training, education, reorientation and creation of conducive and
healthy environment for the growth of enterprises.
Meaning: EDP is an effective human resource development tool. It
designed to help a person in strengthening and fulfilling his
entrepreneurial motive and in acquiring skills and capabilities
necessary for playing his entrepreneurial role effectively.
Objectives of the Programme:
In line with the national programme for the promotion and
development of small and medium industries in the countryside, the
Industrial Service Institute (ISI) under the Department of Industrial
Promotion (DIP) launched the EDP to give substance to the
government’s policies of stimulation of economicgrowth, dispersing
industries to rural areas and promoting the processing of local raw
materials. The EDP was considered a part of the industrial
development policy which was articulated in the Five Year National
Economic and Social Development Plan.
The Programme had sought to develop entrepreneurial
activities in the rural areas of Thailand as a vehicle for economic
growth with the achievement of the following objectives:
 1. To promote the development of small and medium enterprises
that would encourage self - employment among potential
entrepreneurs.
2. To provide, in the rural areas, special programmes designed to
stimulate new ventures and encourage expansion of existing
activities of small and medium industries.
3. To generate employment and self employment opportunities in
the processing of indigenous raw materials for local
consumption and export.
4. To develop entrepreneurial opportunities for potential
entrepreneurs and upgrade managerial skills for existing
entrepreneurs.
For a sound training programme for entrepreneurship development in
India , the expert group constituted by the NIESBUD accepted that it
must be able to help selected entrepreneurs to:
1. Develop and strengthen their entrepreneurial quality /
motivation.
2. Analyse environment related to small industry and small
business.
3. Select project / product.
4. Formulate projects.
5. Understand the process and procedure of setting up of small
enterprise.
6. Know and influence the source of help / support needed for
launching the enterprise
7. Acquire the basic management skills
8. Know the pros and cons of being an entrepreneur and
9. Acquaint and appreciate the needed social responsibility /
entrepreneurial disciplines.
Some of the other important objectives of entrepreneurial
training are:
1. To let the entrepreneur set or reset the objectives of his
business and work individually and along with his group for
their realization.
2. To prepare him for accepting totally unforeseen risks of
business after such training.
3. To enable him to take strategic decisions
4. To enable him to build an integrated team to fulfill the demands
of tomarrow.
5. To communicate fast, clearly and effectively
6. To develop a broad vision to see the business as a whole and to
integrate his function with it
7. To enable him to relate his product and industry to the total
environment, to find what is significant in it and to take it into
account in his decisions and actions.
 8. To enable him to cope with and co ordinate all relevant paper
work, most of which is statutorily obligatory.
9. To make him accept industrial democracy that is accepting
workers as partners in enterprise and
10. To strengthen his integrity, honesty and
compliance with law the key to success in the long run.

Entrepreneurial Development Cycle

1.Entrepreneurial education
2.Planned publicity for entrepreneurial
opportunities
3. Identification of potential entrepreneurs
through scientific method
4. Motivational training to new entrepreneurs
5. Help and guidance in selecting products and
preparing project reports.
6.Making available techno economic information
and product profits
7.Evolving locally suitablenew products and
processes
8.Availability of local agencies with trained
personnel for entrepreneurial counseling and
promotion.
9.Recognition of entrepreneurial skills

1. Registration of unit
2. Arranging finance
3. Providing land, shed, power, water etc
4. Guidance for selecting and obtaining
machinery
simulatory support 5. Supply of scarce raw materials
6. Getting licences / import licences
Entrepreneurial
7. Providing common facilities
8. Granting tax relief or other subsidy
cycle 9. Offering management consultancy
10. Help marketing product
11. Providing information.

sustaining
 i. Help modernization
ii. Help diversification / expansion / substitute
production
iii. Additional financing for full capacity utilization
iv. Deferring repayment / interest
v. Diagnostic industrial extension / consultancy
source
vi. Production units legislation / policy change
vii. Product reservation / creating new avenues for
marketing
viii. Quality testing and improving service
ix. Need based common facility centre