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Q1: Discuss concept of entrepreneur, entrepreneurship and enterprise?

Entrepreneur

The Concept of Entrepreneurship

Entrepreneur

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Entrepreneurship

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Enterprise

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Person

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Process of action

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Object

The word "Entrepreneur" is derived from the French verb 'entrepredre'. It means 'to undertake'. An entrepreneur can be regarded as a person who has the initiative skill and motivation to set up a business or enterprise of his own and who always looks for high achievements. An entrepreneur is an opportunity seeker. He is also the organizer and coordinator of the agents of production. He has to execute many good functions while establishing a small scale enterprise. The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes. An entrepreneur is very perceptive and takes advantage of business opportunities that will generate high profits.

Definition of Entrepreneurs Today

Entrepreneurship is the process of creating something new and assuming the risks and rewards.

Four aspects of being an entrepreneur today:

Involves creation process.

Requires devotion of time and effort.

Involves rewards of being an entrepreneur.

Requires assumption of necessary risks

Entrepreneurship

Entrepreneurship can be described as a process of action an entrepreneur undertakes to establish his enterprise. Entrepreneurship is a creative activity. It is the ability to create and build something from practically nothing. Entrepreneurship is the attitude of mind to seek opportunities, take calculated risks and derive benefits by setting up a venture. It comprises of numerous activities involved in conception, creation and running an enterprise

According to Peter Drucker Entrepreneurship is defined as ‘a systematic innovation, which consists in the

purposeful and organized search for changes, and it is the systematic analysis of the opportunities such changes might offer for economic and social innovation.

Entrepreneurship is a dynamic process of vision, change, and creation. It requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions. Essential ingredients include the willingness to take calculated risks- in terms of time, equity, or career; the ability to formulate an effective venture team; the fundamental skills of building a solid business plan; and, finally, the vision to recognize opportunity where others see chaos, contradiction, and confusion.

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Enterprise

Entrepreneur is a person who starts an enterprise. The process of creation is called entrepreneurship. The entrepreneur is the actor and entrepreneurship is the act. The outcome of the actor and the act is called the enterprise. An enterprise is the business organization that is formed and which provides goods and services, creates jobs, contributes to national income, exports and overall economic development.

Q2: Write down the necessary characteristics and skills required by a successful entrepreneur?

Characteristics of an entrepreneur:

An entrepreneur is a person who initiates a business venture. There are some essential features of an entrepreneur which are described below.

  • 1. Risk-taking ability: Business is all about taking risks and experimenting. Entrepreneurs need to have risk-taking ability.

  • 2. Self-confidence: Others will trust you only when you trust yourself. This is the most important trait of an entrepreneur, who should have the confidence to take one’s own decisions.

  • 3. Decision-making ability: Entrepreneurs should have the willingness and capability to take decisions in favor of the organization all the time.

  • 4. Competitive: Entrepreneurs should always be ready to give and face competition.

  • 5. Intelligent: Entrepreneurs always need to keep their mind active and increase their IQ and knowledge.

  • 6. Visualization: Entrepreneurs should have the ability to see things from different point of views.

  • 7. Emotional tolerance: The ability to balance professional and personal life and not mixing the two is another important trait of an entrepreneur.

  • 8. Leadership quality: Entrepreneurs should be able to lead, control and motivate the mass.

  • 9. Managerial skill: Entrepreneurs should have the required skill to manage different people such as clients, employees, co-workers, competitors, etc.

    • 10. Conflict resolution skill: Entrepreneurs should be able to resolve any type of dispute.

    • 11. Organizing skill: They should be highly organized and should be able to maintain everything in a format and style.

    • 12. High motivation: Entrepreneurs should have high level of motivation. They should be able to encourage everyone to give their level best.

    • 13. Creative: They should be innovative and invite new creative ideas from others as well.

    • 14. Reality-oriented: They should be practical and have rational thinking

    • 15. Others: The other features are ambition, education and training, long term involvement

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Skills of successful entrepreneur:

To become a successful as an entrepreneur in its business life, a businessman should possess a quite a number of essential qualities. Those are noted below:

  • 1. Confidence to Delegate Tasks: An entrepreneur should be confident to delegate tasks to an experienced member of the company, who has the ability to get tasks completed.

  • 2. Effective Time Management:

Proper time management is necessary to differentiate between the extremely urgent tasks and those that can wait. An entrepreneur should use a notebook or whiteboard to prioritize tasks by writing them

down.

  • 3. Proper Listening and Communicating Well:

Entrepreneurs need to be good at listening and communicating. If they lack this quality then this may

result in miscommunication and wastage of time. Apart from this, extra work is required to correct the miscommunication.

  • 4. Sales Skills:

Being able to sell is something that is key to every entrepreneur. It’s this ability that allows

entrepreneurs to attract the funding that they do, because they convince investors that they and their ideas are worth time and money.

  • 5. Risk Taking:

Taking risks that may seem slightly mad to the rest of us is a sure sign of the entrepreneurial spirit. Whilst many of us would feel some trepidation at gaining the responsibility of a large sum of funding, for example, the entrepreneur jumps in and starts buzzing with ideas on how she can turn it into even more cash.

  • 6. Multitasking:

Entrepreneurs often have to be everything to a business, especially early on in their careers. This means that they will often have to take on a range of jobs which they may or may not already be skilled in.

Entrepreneurs are flexible and willing to learn new skills fast so that they don’t get stuck at a certain

point which then inhibits growth. From business planning to sales and negotiation and much more, there’s always something new for them to master.

  • 7. Ability to Innovate: A good entrepreneur is one who knows all about the latest technologies, techniques and ideas and uses them to their advantage. For the successful entrepreneur, it’s not all just about the ideas, but the ability to act on them, and that’s what being innovative is all about.

  • 8. Ambition:

Ambition is the key driver behind every great entrepreneur. Without ambition, the entrepreneur would never see how much of an impact they and their business could make, and so they would never get as far as they do.

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Q3: What are the sources and methods of new idea generation?

Entrepreneurs frequently use the following sources of ideas:

  • 1. Consumers: The attention to inputs from potential consumers can take the form of informally monitoring potential ideas or needs or formally arranging for consumers to have an opportunity to express their concerns. Care needs to be taken to ensure that the new idea or the needs represents a large enough market to support a new venture.

  • 2. Existing Companies: With the help of established formal methods potential can evaluate competitive products & services on the market which may result in new and more market appealing products and services.

  • 3. Distribution channels: Members of the distribution channels are familiar with the needs of the market and hence can prove to be excellent sources of new ideas. Not only do the channel members help in finding out partially met demands leading to new products and services, they also help in marketing the offerings so developed.

  • 4. Research & developmentEntrepreneur’s own R&D is the largest source of new idea. A formal and well-equipped research and development department enables the entrepreneur to conceive and develop successful new product ideas.

The following are some of the key methods to help generate end test new ideas:

  • 1. Focus Groups: Group of individuals providing information in structured format is called a focus group. Such groups form comments in open-end in-depth discussions for a new product area that can result in market success. In addition to generating new ideas, the focus group is an excellent source for initially screening ideas and concept.

  • 2. Brainstorming A group method of obtaining new ideas and solutions is called brainstorming. The characteristics of this method are keeping criticism away; freewheeling of idea, high quantity of ideas, combinations and improvements of ideas. Such type of session should be fun with no scope for domination. Brainstorming has a greater probability of success when the effort focuses on specific product or market area.

  • 3. Problem inventory analysis: It is a method for obtaining new ideas and solutions by focusing on problems. However, instead of generating new ideas, the consumers are provided with list of problems and then asked to have discussion over it and it ultimately results in an entirely new product idea.

Q4: What are the various short term and long term sources of finance?

Financing is a very important part of every business. Firms often need financing to pay for their assets, equipment, and other important items. Financing can be either long-term or short-term. There are different vehicles through which long-term and short-term financing is made available. A firm’s management is responsible for matching the long-term or short-term financing mix. This mix is applicable to the assets that are to be financed as closely as possible, regarding timing and cash flows.

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Long-Term Financing:

Long-term financing are those that are needed over a long period of time generally over of a year.

Equity Financing:

Equity financing includes preferred stocks and common stocks. This method is less risky in respect to cash flow commitments. The cost associated with equity is generally higher than the cost associated with debt, which is again a deductible expense. Therefore, equity financing can also result in an enhanced hurdle rate that may cancel any reduction in the cash flow risk.

Corporate Bond:

A corporate bond is a special kind of bond issued by any corporation to collect money effectively in an aim to expand its business. This tern is usually used for long-term debt instruments that generally have a maturity date after one year after their issue date at the minimum. Some corporate bonds may have an associated call option

that permits the issuer to redeem it before it reaches the maturity. allow investors to convert the bond into equity.

Other bonds, known as convertible bonds,

Capital Notes:

Capital notes are a type of convertible security that are exercisable into shares. They are one type of equity

vehicle. Capital notes resemble warrants, except the fact that they usually don’t have the expiry date or an

exercise price. That is why the entire consideration the company aims to receive, for the future issuance of the

shares, is generally paid at the time of issuance of capital notes.

Many times, capital notes are issued with a debt-for-equity swap restructuring. Instead of offering the shares (that replace debt) in the present, the company provides its creditors with convertible securities the capital notes and hence the dilution occurs later.

Short-Term Financing:

Short-term financing are closely involved with the financial planning and control activities of a firm.

Commercial Paper:

This is an unsecured promissory note with a fixed maturity of 1 to 364 days in the global money market. It is issued by large corporations to get financing to meet short-term debt obligations. It is only backed by an issuing bank or corporation's promise to pay the face amount on the maturity date specified on the note.

Asset-backed commercial paper (ABCP) is a form of commercial paper that is collateralized by other financial assets. ABCP is typically a short-term instrument that matures between 1 and 180 days from issuance and is typically issued by a bank or other financial institution.

Promissory Note:

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This is a negotiable instrument, wherein one party (the maker or issuer) makes an unconditional promise in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms.

Asset-based Loan:

This type of loan, often short term, is secured by a company's assets. Real estate, accounts receivable (A/R), inventory and equipment are typical assets used to back the loan. The loan may be backed by a single category of assets or a combination of assets (for instance, a combination of A/R and equipment).

Repurchase Agreements:

These are short-term loans (normally for less than two weeks and frequently for just one day) arranged by selling securities to an investor with an agreement to repurchase them at a fixed price on a fixed date.

Letter of Credit:

This is a document that a financial institution issues to a seller of goods or services which provides that the issuer will pay the seller for goods or services the seller delivers to a third-party buyer. A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

Q5: Write a detailed note on franchising?

Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisees). A franchise is an agreement between two business partners:

the franchisee and the franchisor. The franchisee is the entrepreneur that is going to buy the franchise from the larger company, also known as the franchisor. When a franchisee buys a franchise, they are essentially paying the franchisor for their name, general business plan, and help in starting and operating the business. In other words, A form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee. Some of the most popular franchises in the United States include Subway, McDonalds, and 7-Eleven. Franchising is simply a method for expanding a business and distributing goods and services through a licensing relationship.

The relationship between the franchisee and franchisor is extremely important. Obviously, the franchisee needs the support and assistance of the franchisor to succeed, and the franchisor will be paid a percentage of the franchisee's sales, so the franchisor wants to help the franchisee succeed. But, the franchisor must also protect their most valuable assets: their name and reputation.

McDonald's is a great example. When a customer goes to a McDonald's in New York, California, Hawaii, and any state in between, they expect to see the same menu, taste the same food, and generally pay the same price.

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Buying a franchise offers many other advantages that aren't available to the entrepreneur starting a business from scratch. Perhaps the most significant is that you get a proven system of operation and training in how to use it. New franchisees can avoid a lot of the mistakes startup entrepreneurs typically make because the franchisor has already perfected daily operations through trial and error.

There are many advantages to investing in a franchise, and there are also drawbacks. Widely recognized benefits to buying a franchise include a ready-made business operation. A franchise comes with a built-in business formula including products, services, even employee uniforms and well-established brand recognition such as that of McDonald’s. Disadvantages include heavy start-up costs as well as ongoing royalty costs.

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Q6: Explain the factors impacting emergence of entrepreneurship?

The growth of entrepreneurship is not random but influenced by various factors: economic development, cultural, technological development and education.

Economic Factors: Economic environment exercises the most direct and immediate influence on entrepreneurship. Capital is one of the most important prerequisites to establish an enterprise. Availability of capital helps an entrepreneur to bring together the land of one, machine of another and raw material of yet another to combine them to produce goods. The quality and quantity of labour is another factor which influences the emergence of entrepreneurship. Availability of labour makes entrepreneurship attractive.

Technological Factors: Countries with high levels of technological growth also tend to have high levels of entrepreneurial growth. This is because new technology offers people the opportunity to exploit these opportunities for commercial benefit.

Educational Factors: there are high levels of entrepreneurship in highly educated societies as well as under educated countries. Uneducated entrepreneurs tend to have less success than educated entrepreneurs.

Cultural Factors: Culture also influences entrepreneurial growth. Religion may also be influential. People whose religious beliefs put more emphasis on spiritual than material wellbeing may be less likely to set up their own business.

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Q7: Write down the steps involved in the process of entrepreneurship and also explain feasibility study with respect to financial, technical, and market feasibility?

Process of entrepreneurship:

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Financial

Once your analyses of marketing, organizational and technology issues have been completed, the third and final step of a feasibility analysis is to take a look at key financial issues. Answer the following questions as well as you can at this point and identify key issues that will require additional research.

  • a. Start-Up Costs: These are the costs incurred in starting up a new business, including “capital goods” such as land, buildings, equipment, etc. The business may have to borrow money from a lending institution to cover these costs.

  • b. Operating Costs: These are the ongoing costs, such as rent, utilities, and wages that are incurred in the everyday operation of a business. The total should include interest and principle payments on any debt for start-up costs.

  • c. Revenue Projections: How will you price your goods or services? Assess what the estimated monthly revenue will be.

  • d. Sources of Financing: If your proposed business will need to borrow money from a bank or other lending institution, you may need to research potential lending sources.

  • e. Profitability Analysis: This is the “bottom line” for the proposed business. Given the costs and revenue analyses above, will your business bring in enough revenue to cover operating expenses? Will it break even, lose money or make a profit? Is there anything you can do to improve the bottom line?

Technological

The cost and availability of technology may be of critical importance to the feasibility of a project, or it may not

be an issue at all. Key questions to answer include:

  • a. What are the technology needs for the proposed business?

  • b. What other equipment does your proposed business need?

  • c. Where will you obtain this technology and equipment?

  • d. When can you get the necessary equipment?

  • e. How does your ability to obtain this technology and equipment affect your start-up timeline?

  • f. How much will the equipment and technology cost?

Market

The market analysis should be conducted first because it is critical to the success of the business. If you cannot

obtain sufficient quantity to meet expected demand, then your project is not feasible. The key questions that should be answered in the Market Analysis section of the feasibility study are presented below. If these questions cannot be answered adequately, the project is not feasible.

  • a. What is the current or projected demand for your proposed products or services? In other words, how many units can you reasonably expect to sell each month?

  • b. What are the target markets for this product or service? What demographic characteristics do these potential customers have in common? How many of them are there?

  • c. What is the projected supply in your area of the products or services needed for your project?

  • d. What competition exists in this market? Can you establish a market niche which will enable you to compete effectively with others providing this product or service?

  • e. Is the location of your proposed business or project likely to affect its success? If so, is the identified site the most appropriate one available?

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Q8: Define the concept of DIC? Also discuss the various functions performed by DIC's?

District Industries Centers (DICs) have emerged since 1978 as the model agency for development of small and village industries. The DICs were established with a view to provide integrated administrative framework at the district level with professionally qualified personnel in technology, marketing, credit, economic investigation,

raw materials, so that DICs would be the ‘single window’ raw materials, through which all type of assistance

would be channeled to the small-scale sector.

Registration of small industries is done at the district industries centre and PMRY (Pradhan Mantri Rojgar

Yojana) is also implemented by DIC. The organizational structure of DIC’S consists of General Manager,

Functional Managers and Project Managers to provide technical services in the areas relevant to the needs of the

district concerned. Management of DIC is done by the state government. The DIC is an integrated institution at the district level which provides all type of services and facilities to the entrepreneurs. The entrepreneurs can get assistance from DIC for setting up and running an industry.

Functions of DICs:

The DICs provide and arrange a package of assistance and facilities for credit guidance, raw materials, training,

marketing etc. including the necessary help to unemployed educated young entrepreneurs in general. The important functions of DIC are discussed as follow:

  • 1. Identification of entrepreneurs: DICs develop new entrepreneurs by conducting entrepreneurial motivation programmes throughout the district particularly under SEEUY scheme.

  • 2. Provisional registration: Entrepreneurs can get provisional registration with DICs which enable them to take all necessary steps to bring the unit into existence. The provisional registration is awarded for two years initially and can be renewed every year but only for two times.

  • 3. Permanent registration: When the entrepreneur completes all formalities required to commence the production like selection of site, power connection, installing machinery etc he can apply to DIC for permanent registration. It is only after getting the permanent registration that the entrepreneur can apply for supply of raw materials on concessional rates. Permanent registration is essential to avail all types of benefits extended by the government from time to time.

  • 4. Purchases of fixed assets: The DICs recommend loan applications of the prospective entrepreneur to various concerned financial and developmental institutions e.g. NSIC, SISI etc. for the purchase of fixed assets.

  • 5. Clearances from various departments: DIC takes the initiative to get clearances from various departments which is essential to start a unit. It even takes follow up measures to get speedy power connection.

  • 6. Incentives and subsidies: DIC helps SSI units and rural artisans to subsidies granted by government under various schemes. This boosts up the moral as well as the financial capacity of the units to take further developmental activities.

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  • 7. Interest free sales tax loan: SIDCO provides interest free sales tax loan up to a maximum limit of 8% of the total fixed assets for SSI units set up in rural areas. But the sanction order for the same is to be issued by DIC.

  • 8. Assistance of import and export: Government is providing various types of incentives for import and export of specific goods and services. These benefits can avail by any importer or exporter provided the same is routed through the concerned DIC. Export and import license is also issued to the importer or exporter only on the basis of recommendation of DIC.

  • 9. Training programmes: DIC organizes training programs to rural entrepreneurs and also assists other institutions or organization imparting training to train the small entrepreneurs.

10. Self-employment for unemployed educated youth: The DICs have launched a scheme to assist the educated unemployed youth by providing them facilities for self employment. The youth should be in the age group of 18 to 35 years with minimum qualification of Metric or Middle.

Q9: Write down the steps involved in writing a project report?

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Q10: Examine the steps involved in business plan preparation and explain each stage?

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