UNIT-2

ENTREPRENEURIAL SKILLS
NOTES

Entrepreneur:
An entrepreneur (उद्यमी, उद्यमकत्तार्, जो�खम उठाने वाला) is a person who decides to start their own company
based on a concept they have or a product they have developed, taking on the majority of the risks and enjoying
the majority of the advantages.

इंटरप्रेन्योर वह व्यिक्त होता है जो नए तौर-तर�क� के साथ अपना व्यापार करता है । उसके व्यापार करने के पीछे
एक सोच होती है, एक �वज़न होता है । एक नए �वचार या अवधारणा के साथ एक �बजनेस शुरू करता है ।
Business – Meaning and Types
A business is described as an ongoing activity in which people engage in economic activity with the intention of
making a profit through the production, sourcing, purchase, and sale of goods and services.

Businesses share the following characteristics regardless of their type, size, scale, or ownership:
Trade-related – Trade-based enterprises are those that primarily involve the buying and selling of goods or
services.
Economic or social motive – Typically, the main goal of most firms is to make a profit. This is why they engage in
economic activities including production, distribution, trade, and expansion.
Presence of an entrepreneur – Every business has a founder who is more than just an entrepreneur. This person
is in charge of taking the initiative to launch, manage, and expand the firm, as well as to make important decisions
and accept the associated risks.
Regular Transactions – A company needs to conduct transactions and deal with customers frequently. Even if a
profit is made, an activity that only involves one transaction in which products and services are exchanged or
transferred cannot necessarily be regarded as a business.
Uncertainty – Every firm is characterized by uncertainty regarding sales, profits, and success. There is no assurance
that the money invested will yield a return or that the company will make a certain quantity of money.

Types of Businesses
There are basically four types of Businesses –
Manufacturing Business – Manufacturing businesses source product s that can be used as raw materials, with the
intention of converting these materials to make an end product.
Service Business – A company that provides services to its clients is known as a service business. Transportation,
cleaning, travel, hospitality, maintenance, and consultation are a few examples of service business.
Merchandising Business – One of the most common business types is a merchandising company. A company that
buys finished goods and resells them to customers is known as a merchandiser. Think about supermarket or clothes
retailer.
Trading Business – Reselling products is another activity done by a trade company. The distinction between a
trading business and a merchandising business is that a trader is not required to maintain an inventory. For
example Real estate brokers, middlemen, importers, exporters, foreign exchange traders, etc. are a few examples
of trading firms.
Hybrid Business – Combining various organisational patterns to create goods and/or services is what is meant by
a hybrid business model. Businesses have realised that hiring virtual assistants is the most effective approach to
streamline operations, cut expenses, and expand their operations.

Features of Types of Businesses

Types of Businesses in Our Community
Based on size –
Micro Enterprise (उद्यम) – A micro enterprise is a business enterprise where the investment in plant and
machinery or equipment is not more than INR 1 crore and turnover does not exceed INR 5 crores.

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Small Enterprise – A small enterprise is a business enterprise where the investment in plant and machinery or
equipment is not more than INR 10 crore and turnover does not exceed INR 50 crores.
Medium enterprise – A medium enterprise is a business enterprise where the investment in plant and
machinery or equipment is not more than INR 50 crore and turnover does not exceed INR 250 crores.

Based on legal form –

Sole proprietorship – In a sole proprietorship, the ownership and control of the business is with one single person,
and the liability of the owner is not separate from the entity.
One Person Company – A One Person company also has only one person as a member, who acts in the capacity
of both, a shareholder and a director, but an OPC is legally separate from its owners. There is no threat on the
owner’s personal property in case of unmet liabilities.
Partnership – Partnership is a legal form, where at least two people, or more start a business as co-founders or
co-owners and divide the share as per agreement. The partners are personally liable for an unlimited amount of
liabilities.
Limited Liability Partnership – In a Limited Liability Partnership, there are two or more partners. In this, no one
single partner or owner is individually responsible for any other partner’s or member’s negligence or misconduct
or liability.
Company – A company is defined as a legal entity formed to get engaged in business, by a group of individuals.
Usually, these individuals have limited liability, and the capital in units of equal value of a company are called
‘shares’. Company can be public or private.

Based on sector –
Primary sector – Businesses that extract, retrieve, harvest, and produce raw materials using earth-based natural
resources are included in this category. Coal, wood, wheat, iron, corn, and other raw commodities are some
examples. Mining, agriculture, fishing, horticulture, and other core sectors are examples.
Secondary sector – The conversion of raw materials into finished items is the primary activity of enterprises in this
industry. It organises all manufacturing variables using primary sector items to create both utility and luxurious
goods.
Tertiary sector – This sector is defined by provision of services to businesses and customers. It is completely based
on a service and there is no production of goods involved.

Objectives of Entrepreneurship Development

Some of the core objectives of entrepreneurship development include:
1. Assisting entrepreneurs in undergoing the process of entrepreneurship.
2. Handholding budding entrepreneurs to recognize and design unique business opportunities.
3. Helping aspiring entrepreneurs start and grow dynamic businesses that provide high value add.
4. Developing the motivational needs of entrepreneurs.
5. Training entrepreneurs to develop the required skills and gain knowledge for running and managing a new
business.
6. Providing support to entrepreneurs for effective business planning
7. Accelerating and incubating new ideas.
8. Aiding in the availability of technology or raw material.
9. Creating adequate infrastructure for entrepreneurial activities.
10. Providing financial assistance from banks and other financial institutions.
11. Enabling a suitable entrepreneurship ecosystem and business environment.
12. Implementing norms, policies and rules for establishment of new ventures and enterprises.
13. Providing tax benefits, incentives, subsidies etc. for creation of new enterprises.
14. Encouraging research and development across industries

Phases of Entrepreneurship Development

Stimulatory phase
Stimulatory phase involves stimulating or generating need, interest, motivation and awareness among individuals
to become entrepreneurs. It is done by orienting them towards the meaning, process, benefits and practice of
entrepreneurship.
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Support phase
The support phase involves helping new businesses with their varied activities through mentoring, incubating,
funding, and counselling the entrepreneurs. Some of these actions include choosing a business strategy, creating
a prototype or product, registering a company legally, consulting on management issues, providing money,
providing a building and power, choosing the right equipment and plant, obtaining licences and permissions, etc.
Sustenance phase
The goal of the maintenance phase is to aid businesses in making expansion plans. Strategies for growth,
expansion, diversification, modernization, etc. are all given guidance. Additionally, assistance is provided in the
form of research and development, additional funding, market research, etc.

Challenges of Entrepreneurship Development

• Lack of continued motivation
• Lack of formal education
• Low technical knowledge
• Absence of managerial skills
• Inadequate infrastructure and resources
• Lack of finance availability
• Lack of awareness about entrepreneurship schemes
• Strict regulatory framework
• Low margin market linkages

Entrepreneurship – Characteristics, Role and Rewards

Characteristics of Entrepreneurship
Innovation
innovation can be understood as creative use of one’s ideas to propose a solution that introduces something
unique or new to the world. There are many types of innovation such as product, process, disruptive etc.
Dynamic Economic Activity
Entrepreneurship involves creation of value or wealth through a business enterprise, that buys and sells
commodities/product/services and uses resources optimally.
Risk bearing
When putting certain decisions and ideas into practise, entrepreneurs must take risks. Businesses can anticipate
certain risks, such supply constraints, rising raw material costs, price volatility, shifts in governmental laws, etc.
Potential For Profit
“Profit potential is the likely level of return or compensation to the entrepreneur for taking on the risk of
developing an idea into an actual business venture.” For a commercial entrepreneur, profit is usually the main
goal.

Role of Entrepreneurship
Capital Formation – Entrepreneurship leads to value addition and creation of wealth, because entrepreneurs
promote capital formation by mobilising the idle savings of public.
Employment Generation – Increased entrepreneurial activity has the potential to lead to more prospects for large-
scale employment. Numerous employment opportunities for skilled, unskilled, and jobless people are produced
as more firms, offices, factories, trade entities, etc. are established, especially in emerging nations.
Balanced Regional Development – Entrepreneurship helps to remove regional disparities through setting up of
industries in less developed and backward areas. Micro businesses and cottage industries also play a role in
increasing entrepreneurial activity in many specific cultural regions.
Value Creation – Value creation happens when a client base recognizes a product or service as having more value
and a firm makes money by selling the good or service to satisfy the customer’s requirements and wants.
Wealth Distribution – Due to entrepreneurship and transaction-based activities, wealth and income are
distributed among people and regions. Salary payments are made to employees, suppliers are compensated for
their supplies, commodities are sold in a variety of markets, large-scale services are rendered, etc.

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Industrialization and Development – If a business is established in an area and is perceived as a lucrative prospect,
it is possible that other people will be inspired to establish businesses of a similar nature.

Rewards of Entrepreneurship
Economic development – The most effective use of resources, the development of new concepts, wealth creation,
constant money flow, skill development, etc. are some characteristics of economic development. These aspects
are all made possible by entrepreneurship and are crucial for a country’s economic growth.
Enterprise and Business Creation – Entrepreneurship has a direct impact on the growth of businesses. By merging
and coordinating various resources, including human, financial, physical, and intellectual capital, as well as
entrepreneurial aptitudes like risk-taking, creativity, leadership, and resource management.
Capacity Building – As an entrepreneur spends in educating staff members and enhancing their managerial skills,
skill development and training is a big benefit of becoming an entrepreneur. Similar to this, an entrepreneur also
improves his or her own skills by resolving issues, making choices, accepting setbacks, trying out other strategies,
etc.
Improved Standard of Living – Customers have various options when choosing from a variety of goods and services
to fulfil the same need thanks to entrepreneurship. Higher standards of life are a result of the diversity and
accessibility of better goods and services provided by businesses.

Questions and Answers

Q1. What is Entrepreneurship?
Answer – An entrepreneur is a person who creates a new business, takes risks, brings new ideas to start
a business and is self-employed.

Q2. What are the different ideas entrepreneurs add?

Answer – New ideas with which an entrepreneur adds varieties of product, new services, cost reduction
ideas, or new marketing techniques.

Q3. What are the roles and benefits of entrepreneurs?

Answer – The role and benefits of entrepreneurship
a) Economic Development – As entrepreneurs provide quality products and services for the customer,
entrepreneurs grow their business, invest the money in the business and expect good returns.
b) Social Development – In the beginning the business is usually very small, to become successful in
the business entrepreneur have to expand their business, to expand the business entrepreneur have
to work hard and they have to create more jobs. when the jobs are created by the entrepreneur then
more people will earn money and have a good life.
c) Improved Standard of Living – When entrepreneurs sell quality products to the customer, quality
products help people live a more comfortable life.
d) Optimal Use of Resources – Around us a lot of renewable and no-renewable resources are available.
entrepreneurs have to find the most optimal ways of using the resources to reduce costs and increase
their profits.

Q4. What are the qualities of successful entrepreneurs?

Answer – An entrepreneur needs to have the following qualities –
a) Patience – Success may not be achieved in one-day , it can take time. It is important for an
entrepreneur to be patient.
b) Positivity – Always be positive when you are finding difficulty in the business. An entrepreneur has
to think positively even when he/she takes a big rist.
c) Hard working – An entrepreneur has to work hard till it becomes successful in the business.
d) Confidence – An entrepreneur has to make decisions and be very confident about their business.
An entrepreneur needs to communicate with the customers confidently.

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 e) Open to Trial and Error – Entrepreneurs have to implement new ideas, implement trial and error
and new experiments without fear of failure to tell the business becomes successful.
f) Creativity and Innovation – An entrepreneur should be able to see and identify the problem from
different perspectives and come up with creative solutions.

Q5. Characteristics of Entrepreneurs?

Answer – Adaptable and flexible to achieve the goals of enhancing quality and customer satisfaction
1. Believe in hard work
2. Ability to take up risks
3. Money Management
4. Knowledge of the product and services and their need or demand in the market
5. Effective planning and execution
6. Financial literacy

Q6. What is wage employment?

Answer – Wage management is based on work grades and performance parameters. Wage
management’s goal is to take reward and give high performance standards in the business.
The wage management does not take too much risk but entrepreneurs have to take risks.

Q7. Benefits of entrepreneurship?

Answer – The various benefits of entrepreneurship are –
1. Work for yourself, and not for others
2. More risk, more profit
3. Do what you are interested in
4. Make profits for yourself

Q8. What are the different types of business activities in entrepreneurship?

Answer – There are three types of business activities in entrepreneurship
a) Product business – If entrepreneurs sell any physical product to the customer which can be seen
and touched is called a product business. example grocery item, sport item or electronic item.
b) Service business – If an entrepreneur provides some services to the customers it is called service
business. example – caching institute, electronic services shops, call centers etc.
c) Hybrid business – Combination of product and service business is called hybrid business. example
– Mobile shop, they provide sell and service both.

Q9. Difference between product business and service business?

Answer –
a) Product Business -If entrepreneurs sell any physical product to the customer which can be seen and
touched is called a product business. example grocery item, sport item or electronic item.
b) Service Business – If an entrepreneur provides some services to the customers it is called service
business. example – caching institute, electronic services shops, call centers etc.

Q10. Types of product – based business?

Answer – There are two types of product – based businesses
a) Manufacturing Businesses – There are a lot of different types of factories which manufacture
different types of products.
b) Trade Business – That type of business which buys and sells products to customers. In the trade
business transport the product from the factory to warehouses and then to the shops. example –
retail shops, distributors and wholesalers.

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Q11. What is the entrepreneurship development process?
Answer – To enhance the knowledge and skills through several training programs whether it is formal
or informal, the entrepreneur development process helps to achieve the goals.
There are different types of steps for starting a business
1. Idea
2. Getting money and material
3. Understanding customer needs
4. Improving Product/ service
Q13. What is entrepreneurship?
Answer – An entrepreneur is a person who creates a new business, takes risks, brings new ideas to start
a business and is self-employed.
Q14. Which are the qualities of an entrepreneur?
Answer – The qualities of entrepreneur are Patience, Positivity, Hardworking, Confidence, Open to Trial
and Error and Creativity and Innovation.

MCQ
Q1. An _______________ is a person who is self – employed, is willing to take a calculated risk and
brings in a new idea to start a business.
a. Software Engineer
b. Entrepreneurship
c. Civil Engineer
d. Mechanical Engineer
Answer ⟵b. Entrepreneurship
Q2. The process of developing a business plan, launching and running a business using innovation
to meet customer needs and to make a profit is __________________.
a. Software Engineer
b. Entrepreneurship
c. Civil Engineer
d. Mechanical Engineer
Answer ⟵b. Entrepreneurship
Q3. Business is a (an) _____________________ activity.
a. Social
b. Economic
c. Hazardous
d. Selling
Answer ⟵b. Economic
Q4. What is the aim of entrepreneurship?
a. Earn a profit
b. Solve customers’ need innovatively
c. Both of the above
d. None of the above
Answer ⟵c. Both of the above
Q5. Business is a type of economic activity that involves the constant and regular production and
distribution of _____________ and ____________ to meet human needs.
a. Purchase, Sells
b. Goods, Services
c. Service, Payment
d. Service, Money

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 Answer ⟵b. Goods, Services
Q6. What is the aim of entrepreneurship?
a. Solve customer’ need
b. Ear a profit
c. Both a) and b)
d. None of the above
Answer ⟵c. Both a) and b)
Q7. Entrepreneurship is a ____________
a. Process to make a profit
b. Process of developing business plan
c. Launching a business using innovation to meet customer needs
d. All of the above
Answer ⟵d. All of the above
Q8. To become a successful entrepreneur, you need to follow the following proper sequence:
a) Identify Need
b) Recognize Opportunity
c) Idea and start of a business
d) Growing the business
a) c, d, b, a
b) a, b, c, d
c) a, d, c, b
d) b, a, c, d
Answer ⟵b) a, b, c, d
Q9. Entrepreneurs create _______ opportunities, to grow the economy of the country.
a. Business
b. Credit
c. Money
d. None of the above
Answer ⟵a. Business
Q10. As ____________ create value by making available better and cheaper products and services for
customers, the economy grows.
a. Software Engineer
b. Entrepreneurship
c. Civil Engineer
d. Mechanical Engineer
Answer ⟵b. Entrepreneurship
Q11. A business started by an entrepreneur is usually a very_________ in the beginning.
a. Large Scale of Business
b. Small business
c. Modern businesses
d. None of the above
Answer ⟵b. Small business
Q12. There are various natural resources present around us _____________. Entrepreneurs keep
working to find the most optimal ways of using the resources to reduce costs and increase their
profits.
a. Renewable
b. Non-renewable
c. Both a) and b)
d. None of the above
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 Answer ⟵c. Both a) and b)
Q13. What is the aim of entrepreneurship?
a. Solve customers need
b. Earn a Profit
c. Both a) and b)
d. None of the above
Answer ⟵c. Both a) and b)
Q14. It is important for an entrepreneur to be __________ in running a business.
a. Patient
b. New Idea
c. Both a) and b)
d. None of the above
Answer ⟵c. Both a) and b)
Q15. When a person begins a business, he or she may encounter several challenges and failures.
Even while taking a significant risk, an entrepreneur must think _______.
a. Positively
b. Negatively
c. Both a) and b)
d. None of the above
Answer ⟵a. Positively
Q16. There may be losses at times but even then an entrepreneur should stay___________ and
continue to work hard towards their goal.
a. Positively
b. Negatively
c. Both a) and b)
d. None of the above
Answer ⟵a. Positively
Q17. The ability to handle take risks is a ____________
a. Quality of Entrepreneur
b. Role of Entrepreneur
c. Characteristics of Entrepreneurship
d. None of the above
Answer ⟵c. Characteristics of Entrepreneurship
Q18. It is necessary for an entrepreneur to continuously _________ towards his/her own and
company’s goals.
a. Work Hard
b. Always take rest
c. Not participate actively
d. None of the above
Answer ⟵a. Work Hard
Q19. Entrepreneurs need to be open to _________and try them without fear of failure.
a. Invest all of money
b. New Ideas
c. Both a) and b)
d. None of the above
Answer ⟵b. New Ideas
Q20. Qualities of entrepreneurs are
a. Never giving up
b. Hard working
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 c. Perseverance
d. All of the above
Answer ⟵d. All of the above
Q21. Experiment with many ideas is a quality related to __________.
a. Perseverance
b. Confidence
c. Creativity
d. Trial and error
Answer ⟵d. Trial and error
Q22. Entrepreneur’s creativity and innovation quality are related to __________
a. Positive
b. Patience
c. Solution
d. Hard Working
Answer ⟵c. Solution
Q23. An entrepreneur should be able to see a problem from different perspectives and come up
with original and______________.
a. Creative Solutions
b. New Ideas
c. Both a) and b)
d. None of the above
Answer ⟵c. Both a) and b)
Q24. An entrepreneur should be willing to take a ___________ and is always open to new ideas to
make his/her business grow.
a. Satisfying human need
b. Product and Service
c. Calculated Risk
d. Regular Production
Answer ⟵c. Calculated Risk
Q25. A person who does not take risks, is not open to new ideas and is running the business only
to earn a steady source of income is not ____________.
a. An Entrepreneur
b. A Businessman
c. Both a) and b)
d. None of the above
Answer ⟵a. An Entrepreneur
Q26. Taking risks can lead to failure but failure is __________ and entrepreneurs continue their course
of action till they succeed.
a. Acceptable
b. Not Acceptable
c. Success
d. None of the above
Answer ⟵a. Acceptable
Q27. Characteristics of Entrepreneurship
a. Ability to take up risks
b. Believe in Hard work and discipline
c. Knowledge of the product and services and their need or demand in the market
d. All of the above
Answer ⟵d. All of the above
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Q28. Why did the entrepreneur business fail?
a. Was he/she selling low quality goods/services?
b. Was he/she selling products not required in the neighborhood
c. What was the risk he/she had taken
d. All of the above
Answer ⟵d. All of the above
Q29. Wage employment always consists of
a. One Party
b. Two Parties
c. Three Parties
d. Four Parties
Answer ⟵b. Two Parties
Q30. Wage workers does not involve too much in the _____________
a. Salary
b. Innovation
c. Risk
d. Opportunity
Answer ⟵c. Risk
Q31. Benefits of entrepreneurship
a. Do what you are interested in
b. Make profits for yourself
c. More risk, more profit
d. All of the above
Answer ⟵d. All of the above
Q32. The principal focus of entrepreneurship is
a. More risk
b. More Profit
c. More work
d. More job
Answer ⟵b. More Profit
Q33. How many types of business activities are there in entrepreneurship skill?
a. Product Business
b. Service Business
c. Hybrid Business
d. All of the above
Answer ⟵d. All of the above
Q34. A company is one in which a vendor and a buyer exchange an item, these item can be
touched and felt, is called _____________.
a. Product Business
b. Service Business
c. Hybrid Business
d. All of the above
Answer ⟵a. Product Business
Q35. A company in which a seller assists a consumer in completing a task is known as __________.
a. Product Business
b. Service Business
c. Hybrid Business
d. All of the above
Answer ⟵b. Service Business
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Q36. A______ is the one where the business is doing both selling product and selling services.
a. Product Business
b. Service Business
c. Hybrid Business
d. All of the above
Answer ⟵c. Hybrid Business
Q37. There are two types of product – based businesses.
a. Manufacturing Businesses
b. Trade Businesses
c. Both a) and b)
d. None of the above
Answer ⟵c. Both a) and b)
Q38. Manufacturing businesses are the type of
a. Trade Businesses
b. Hybrid based business
c. Product based business
d. Service based businesses
Answer ⟵c. Product based business
Q39. ____________ Business transport the product from the factory to warehouses and then finally
to shops near the customers.
a. Trade Businesses
b. Hybrid based business
c. Product based business
d. Service based businesses
Answer ⟵a. Trade Businesses
Q40. In the ________________ system, training programmers are conducted to bring about
awareness, knowledge and skills related to entrepreneurship.
a. Formal Learning
b. Informal Learning
c. Both a) and b)
d. None of the above
Answer ⟵a. Formal Learning
Q41. Type of Entrepreneurship Development Process
a. Formal
b. Informal
c. Both a) and b)
d. None of the above
Answer ⟵c. Both a) and b)

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