Class 12 Employability Skills Class Notes
Unit 4 Entrepreneurship Skills
Introduction
Entrepreneurs identify an innovation to seize an opportunity, mobilise funds, raise capital, and take calculated risks to open markets or new businesses for products, processes, and services.
Entrepreneurship development refers to the process of enhancing entrepreneurial skills and knowledge through structured training and institution-building programmes. It focuses on an individual, who wishes to start or expand a business.
Training in entrepreneurship development needs to include support for —
- (a) entrepreneurship orientation and awareness,
- (b) development of competencies (knowledge, skills and attitudes) necessary to recognise a market opportunity and organise resources to meet it, and
- (c) improvement of business performance for growth and competitiveness.
The National Institute for Entrepreneurship and Small Business Development is a premier organisation of the Ministry of Skill Development and Entrepreneurship, Government of India, engaged in training, consultancy and research to promote entrepreneurship and skill development.
Entrepreneurship and Entrepreneur
The word ‘entrepreneur’ is derived from the French word entreprendre, which means ‘to undertake’. Cole defines entrepreneurship as, “A purposeful activity to initiate, maintain and aggrandise profit-oriented business.”
Characteristics of entrepreneurship
- It is an economic activity done to create, develop and maintain a profit-oriented organisation.
- It begins with identifying an opportunity as a potential to sell and make profit in the market.
- It deals with optimisation in utilisation of resources.
- It is the ability of an enterprise and an entrepreneur to take risks.
Entrepreneurship — Art and Science
Entrepreneurship is the perfect combination of art and science as it requires specific progression and procedures to be followed and also the skill to digress when required, and yet make the entire activity profitable and growth oriented. An example of art is music. A musician can play music notes in any combination to create soothing and soulful music.
Qualities of a successful entrepreneur
(a) Initiative: In the world of business, opportunities come and go. An entrepreneur must be able to initiate action and take advantage of an opportunity.
(b) Willingness to take risks: In any business, there is an element of risk involved. It implies that it is not necessary that every business shall earn a profit. This deters individuals to take up risks and start a business.
(c) Ability to learn from experience: An entrepreneur may make mistakes. However, once an error is committed, it must be tried that it is not repeated as it may lead to heavy losses. Therefore, the person must have the ability to learn from experience.
(d) Motivation: It is necessary for success in every walk of life. Once you get motivated to do something, you will not rest until you complete it. It is an essential quality to become a successful entrepreneur.
(e) Self-confidence: For achieving success in life, a person needs to have confidence in oneself. Someone, who lacks confidence, may not be able to achieve much in life or inspire others to work. Self-confidence is reflected in courage, enthusiasm, and ability to lead.
(f) Hard work: There is no substitute for hard work in life. While running a business, one problem or the other may arise every day. The entrepreneur has to be vigilant so as to identify the problems and solve them as early as possible. This requires hard work on the part of the entrepreneur. The person cannot afford to say: “The office hours are over now and I will not work any longer.”
(g) Decision making ability: In running an enterprise, an entrepreneur has to take a number of decisions. If an entrepreneur does not have the ability to make suitable and timely decisions, the person may miss out on an opportunity and incur losses.
Type of entrepreneurs
There are many types of entrepreneurs, which include the following.
Service entrepreneurs
These entrepreneurs either create a new market for their services or provide a service in an existing market. They spot an idea and convert it into a service, which is unprecedented or not available in the market.
Business entrepreneurs
These are entrepreneurs, who undertake business and trading activities and are not concerned with the manufacturing work. A business entrepreneur identifies the potential of a product in a market.
Industrial entrepreneurs
An industrial entrepreneur is, essentially, a manufacturer, who identifies the needs of customers and creates products or services to serve them.
Agricultural entrepreneurs
Agriculture has always been considered as a low-yielding entrepreneurship. Agriculturists have now introduced new and innovative technology to maximise the yield, giving birth to agriculture entrepreneurship.
Technical entrepreneurs
The Industrial Revolution gave birth to technical entrepreneurs, who uses their technical expertise to create and offer machines, tools, and methods. Technical entrepreneurs use their technical knowledge and skills to innovate.
Non-technical entrepreneurs
These entrepreneurs use their expertise in providing services to create a market for technical entrepreneurs. Their expertise is in non-technical aspects of a product or service.
Professional entrepreneurs
Such an entrepreneur starts a business, nurtures it, and makes it reach a point of self-sustenance. Once the project reaches that point, the entrepreneur sells the business and starts a new one, and then, follows the same cycle.
IT entrepreneurs
People who take up entrepreneurship in the field of Information Technology (IT) are called IT entrepreneurs. The difference between IT entrepreneurs and technical entrepreneurs is that the latter work in the field of electronics, mechanical devices or even civil works, while IT entrepreneurs are confined to innovation in the field of Information Technology.
Women entrepreneurs
As the name suggests, when women take up entrepreneurship, they are called women entrepreneurs. Several women entrepreneurs are taking the initiative to start entrepreneurial activities and many of them have even made it to the top.
Social entrepreneurs
Individuals, who focus on developing solutions that benefit society, are called social entrepreneurs. They develop, fund, and implement solutions that are directed toward society, culture, and the environment. The term ‘social innovator’ is used interchangeably with social entrepreneurs.
Family business entrepreneurs
When a family or an individual runs a business successfully and passes it on to the next generation, then such an entrepreneur is, generally, termed a family business entrepreneur. The person, who is handed over the business or the functioning of an enterprise, is not the first generation entrepreneur. The person carries out all entrepreneurial activities as inherited in the same manner or introduces certain technological advancements to the existing way and method of the family business.
First generation entrepreneurs
First-generation entrepreneurs are those who do not have any entrepreneurship background. They can be of different age groups and backgrounds. An individual, who starts at the age of 50 years without any entrepreneurship background, is also a first-generation entrepreneur, and someone else, who starts at the age of 17 years, is also a first-generation entrepreneur.
Roles and functions of an entrepreneur
(a) Identifying entrepreneurial opportunity:
There are many opportunities in the world of business. These are based on human needs like food, fashion, education, etc., which are constantly changing. These opportunities are not realised by the general public. However, an entrepreneur senses the opportunities faster than others.
(b) Turning ideas into action:
Entrepreneurs must be capable of turning ideas into reality. They should be able to collect information regarding ideas, products, and practices to meet the market demand.
(c) Feasibility study:
Entrepreneurs conduct studies to assess the market feasibility of a proposed product or service. They anticipate problems and assess the quantity, quality, cost, and sources of inputs required to run the enterprise. Such a blueprint of all activities is termed as a ‘business plan’ or ‘project report’.
(d) Resourcing:
An entrepreneur needs various resources in terms of money, machine, raw material, and workforce to run an enterprise successfully. An essential function of an entrepreneur is to ensure the timely availability of all these resources.
(e) Setting up an enterprise:
For setting up an enterprise, the entrepreneur may need to fulfill some legal formalities. The person must also try to find a suitable location, design the premises, install machinery, and do many other works.
(f) Managing the enterprise:
One of the important functions of an entrepreneur is to run the enterprise. The person has to manage the workforce, materials, finance, and organise the production of goods and services. The person has to market each product and service, after ensuring appropriate returns (profits) of the investment. Only a well-managed organisation yields the desired results.
(g) Growth and development: Once the enterprise achieves the desired results, the entrepreneur has to explore another higher goal for its growth and development. The person is not satisfied only with
achieving a set goal but constantly striving to achieve excellence.
What motivates an entrepreneur?
An entrepreneur has the potential and willingness to overcome every hurdle that comes in the way of the person’s entrepreneurial endeavors. The person finds out ways and means to pursue one’s dreams and fulfill the goals.
Following are some of the qualities that motivate an entrepreneur.
- Standard of excellence
An entrepreneur constantly sets high standards and strives to attain the standard of excellence by working hard and showing innovativeness. - Uniqueness
For an entrepreneur, one of the most important qualities is to remain unique in everything the person does and the way it is done. - Focus on long-term goals
Long-term goals are those that are distant in terms of period. An entrepreneur focuses more on what is to be achieved in the distant future rather than shortly. - Identifying opportunities and risk-taking
Aspiring entrepreneurs can identify new business opportunities and evaluate their potential and risks as follows.- Community concerns:
Look for issues that concern your community.
- Personal experiences:
If you aspire to become an entrepreneur, you must listen to the personal stories of successful entrepreneurs and draw inspiration. - Research with others:
Speak to like-minded people, get involved through social groups and join local startup groups.
- Community concerns:
- Community concerns:
Look for issues that concern your community. Sometimes, starting locally can reap huge benefits. - Personal experiences:
Many powerful world-changing ideas come from the experiences and challenges an entrepreneur faces in life. If you aspire to become an entrepreneur, you must listen to the personal stories of successful entrepreneurs and draw inspiration. - Research with others:
Speak to like-minded people, get involved through social groups and join local startup groups. Many a time, discussion with others opens various doors of opportunities.
Startups
A startup is a company that is in the first stage of its operations. A startup and a traditional business venture are different, most notably for the way they think about growth.
A startup is often financed by the founders until the business gets off the ground, and it gets outside finance or investments.
Let us understand more about startups.
- Startups can be started with minimum investment. Most startups thrive on an idea that involve technology or offer technology-driven solutions.
- Startups seek financial investment differently than most small businesses. They rely on capital that comes via angel investors or venture capital firms, while small business operations rely on loans and grants.
- Startups come up with an innovative idea. At the same time, they like to get guidance and mentoring from an expert.
Barriers to Entrepreneurship
A business venture is a lot like a hurdle race. It, usually, involves risks. A risk is any situation, which involves danger. So, while running the race as an entrepreneur, many hurdles, such as financial constraints may come in the way. These things can stop a person from achieving success. These are called ‘barriers’.
Environmental barriers
One of the biggest barriers that entrepreneurs face is environmental factors. Environmental factors can be many. But the most common ones include the following.
- Lack of adequate resources or raw material.
- Non-availability of skilled labour.
- Lack of requisite machinery and other infrastructure.
- Unavailability of monetary resources on time.
The Indian Government has come up with various schemes to help small-scale entrepreneurs gain capital. Some of these are:
- Government Mudra Yojana — https://mudralsans.in/
- Credit Guarantee Scheme — https://www.cgtmse.in/
- Stand‑Up India Scheme — https://www.standupmitra.in/
No or faulty business plan
“A goal without a plan is just a wish.”
Every entrepreneur wants a successful business. But if a person does not make an action plan, it may lead to a chaotic situation.
Personal barriers
How long will the business last? How much profit will it make? Will my customers like my product? Will I have enough money to support my family? These are the questions that might go through an entrepreneur’s mind before the person starts a business venture.
Self-doubt
It is easy to get discouraged when something goes wrong in a business. Self-doubt comes when we do not have confidence in ourselves and our abilities.
Forming a team and teamwork
Finding suitable people and training them to put in their best for the business is a tedious and difficult exercise. As an entrepreneur, one must find people, who think and feel like the rest of the team.
When new people fit into the culture of the team, work can happen
better and faster.
Entrepreneurial Attitudes
An attitude is a way of thinking or feeling about something. It can be positive or negative, good or bad.
Entrepreneurs think and act differently from people who are wage-employed.
Entrepreneur Attitude vs Wage-employed Attitude
| Entrepreneur Attitude | Wage-employed Attitude |
|---|---|
| The entrepreneur thinks and acts differently. The person not only thinks about one’s work but also the work of one’s employees and the work required for the growth of the company. | A wage-employed person has to do one’s job and not worry about the company. |
Attitude of an Entrepreneur
Entrepreneurial Competencies
Competency is the ability to do something well. The attitudes and competencies required to become a successful entrepreneur.
Entrepreneurial attitudes through different exercises.
Decisiveness
Decisiveness is the ability to make profitable and quick decisions. How does a person become decisive as an entrepreneur?
Decisiveness becomes the most important attribute while setting up a business venture. It is about identifying an opportunity and acting on it. An opportunity is a chance to do something, generally, the right time or moment to do something.
Decisiveness can be developed through the following process:
- Knowing yourself
- Identify opportunities
- Analyse the opportunity
- Problem-Solving
Initiative
Initiative is the ability to take charge and act in a situation before others. Once you have decided what you want to do, the next step is taking action.
Interpersonal skills
Interpersonal means dealing with relationships. It is between two or more persons. Interpersonal skills, thus, mean the competencies required to work with other people.
Therefore, if the entrepreneur wants one’s business venture to grow and do better, the person has to work with a number of people. Thus, it becomes important that we learn how to interact with people. Some ways to do that are as follows.
- Listening
It is important to listen when someone talks. When someone shares something, it is, generally, because the person might have thought about it or it is how one feels. Listening with interest to what someone is saying helps build trust with the person. - Body language
How would you feel if someone had a frown on the face, hands crossed, and leaning back in the chair while talking? Our facial expressions, gestures, and postures are important while working with people. - Positive attitude
Having a positive attitude, generally, implies being optimistic about situations, interactions, and oneself. People with a positive attitude are hopeful and see the best even in difficult situations.
Stress management
That state of mental pressure or tension is called ‘stress’. Sometimes, one experiences stress while working with other people. There are many ways people deal with stress. Some of them are as follows.
- Taking a walk in nature
- Doing a physical activity like running swimming, etc.
- Practicing deep breathing exercises
- Practicing meditation or yoga.
Perseverance
Perseverance is the ability to continue to do something, even when it is difficult. Perseverance can be built in the following ways.
Organisational skills
Organisational skills refer to the ability to make optimal use of one’s time, energy, and resources to achieve one’s goals. Becoming better at these organisational skills would help an entrepreneur become successful.
Organisational skills include the following:
- Time management
Time management is the process of planning and following a conscious control of time spent on specific activities. It is the ability to use one’s time well. Time management includes the following.- Planning well
- Setting goals
- Setting deadlines
- Giving important work responsibilities to other people in a team
- Conducting the most important tasks first
- Goal setting
A goal is somewhere we want to reach. It is the aim or result that we want from an activity. Goal makes us work harder, motivates us to complete what we start and achieve the target. - Efficiency
Efficiency is the ability to do things well, successfully, without wasting time. - Managing quality
Managing quality in a business means setting and maintaining a standard of excellence for products or services being provided to customers. When the business venture starts growing, maintaining quality becomes the most important part because of the number of products being produced every day.
