- Derived from French word Entreprendre means “to undertake”.
- Richard Carleton: “a person who buys factors of production at certain prices in order to combine them into a product with a view to sell them at uncertain prices.”
- F.H. Knight: “a person who bears uncertainty (risk which cannot be insured & is incalculable) can be reduced by taking insurance.”
- J.B. Say: “one who combines the land of one, labour of another & capital of yet another & thus produces a product. By selling product pays rent, wages and interest.”
- Peter F Drucker: “One who considers the changes that take place in market as an opportunity to do business. Innovation is his tool.”
- Joseph Schwnpeter: “Individuals who introduce something new in the market or economy.”
- New encyclopaedia: An individual who bears the risk of operating business in the face of uncertainty about the future
QUALITIES OF ENTREPRENEURS
- Mental ability: intelligent person.
- Organising ability: good organisation.
- Hard work: ready to work for long hours.
- Discipline: highly disciplined- everything to be in order for them.
- Clear objectives
- Need for high achievement- they have a strong desire for achieving something great.
- Optimistic: highly optimistic- not disturbed by present problems-hope favourable future.
- Risk taking: they like challenges.
- H.R. ability: maintain good relations with other people (employee, vendors, customers, bankers).
- Emotional stability: have considerable amount of self-control- business pressure can be handled.
- Communication ability: good communication.
- Self-confidence: tackle problems immediately with self-confidence.
- Adaptability: highly flexible- adapt themselves for any conditions.
- Positive attitude: always think positively, they do not leave hopes even under difficult conditions.
- They are also good managers, pro-active, realistic, have comprehensive awareness & conceptual ability.
WHAT IS ENTREPRENEURSHIP?
- B. HIGGINS: “ The function of seeing investment & production opportunities; organising an enterprise to undertake a new production process; raising capital; hiring labour, arranging for raw material, finding a site & combining these factors of production into a going concern; introducing new techniques, new commodities, discovering new sources of natural resources & selecting top-managers for day-to-day operations.”
- SCHUMPETER: “Entrepreneurship is based on purposeful & systematic innovation. It includes not only the independent businessman but also company directions & managers who actually carryout innovative functions.”
- Thus Entrepreneurship is a combination of various qualities like organisation skills, innovativeness, risk-bearing, managing uncertainty, ability to bring together & use factor of production, analysing market opportunities, observing the change taking place in the market, methods & technologies & studying the tastes & preferences of consumers.
CLASSIFICATION OF ENTREPRENEURS:
1. INNOVATIVE ENTREPRENEUR: he is the one who introduces a new product or a new method of production or opens a new market or explore new source of supply of raw material or carry out a new type of organization. as per the Schumpeter innovative entrepreneur are real entrepreneur.
2. IMITATIVE/ ADOPTIVE ENTREPRENEUR: are those who imitate the successful entrepreneurs in techniques innovated by others.
3. DRONE ENTREPRENEUR: Drone entrepreneur are those who never allow any change in their production & style of functioning. They never explore anything. They are also called Laggards. They are pushed out of market when product loses its marketability.
4. FABIAN ENTREPRENEUR: are always cautious. They neither introduce new changes nor adopt new methods invented by others. They are lazy. They follow old customs, old method of production, techniques.
WOMEN ENTREPRENEURS
- They are a woman or group of women who initiate, organize & operate a business enterprise.
- According to Marshal, any woman or group of woman who innovates, initiates, or adopts an economic activity may be called a woman entrepreneur.
Problems faced by woman entrepreneur
- Economic independence & autonomy are absent.
- Less risk bearing capacity (because of more dependency).
- Family involvement.
Family Business
- Major portion of capital is contributed by family.
- Family members take major decisions & they occupy decision making post.
- Number of generations involved in management & ownership.
- Management is controlled by direct descendant of founders.
- Intention to maintain family involvement.
Advantages:
- It imparts training to younger ones.
- Family & non-family members are treated alike.
- Orientation given by old generation to new generation.
- Can overcome finance difficulties & had times by flowing back profits.
- It functions less in a bureaucratic manner.
-Personal in dealing in dealing with employees & customers.
Disadvantage:
- Role of family members are not clearly defined and therefore there may be confusing structure.
- There may be battle among members for succession.
- Younger generation may not be worthy of position.
- Finance may be drained by some selfish members.
- Personal life of some members may affect the business.
The important roles are:
1] starting the business (Foundation)
2] Building the organization/business.
3] Providing guidance to family members & employees.
4] Involving family in business.
5] Planning for succession.
Characteristics of Next Generation
- They know the business well & they like it.
- They know themselves: their strength & weakness.
- They have had necessary education & experience.
- They are guided by previous generations & advisors.
- They have good interpersonal relationship with other family members in business.
- They earn respect of employees, suppliers, customers & other family members.
- Their skills & abilities fit the most of the business.
- They want to lead & serve.
BEST PRACTICES BY FAMILY BUSINESS
- Communication between family members should be frank.
- Distinct role to be given to senior members.(senior member should be independent).
- Share vision from all the members of the family.
- Documentation of all agreements. It leads to a clear idea of rights & responsibility.
- Conflict resolution by senior members who have no share over the business & who are considered as fair & impartial.
