Section A

Concept of Entrepreneurship

Entrepreneurship is the ability and readiness to develop, organize and run a business enterprise,
along with any of its uncertainties in order to make a profit. The most prominent example of
entrepreneurship is the starting of new businesses.

What are the 4 Types of Entrepreneurship?

It is classified into the following types:

Small Business Entrepreneurship-

These businesses are a hairdresser, grocery store, travel agent, consultant, carpenter, plumber,
electrician, etc. These people run or own their own business and hire family members or local
employee. For them, the profit would be able to feed their family and not making 100 million
business or taking over an industry. They fund their business by taking small business loans or
loans from friends and family.

Scalable Startup Entrepreneurship-

This start-up entrepreneur starts a business knowing that their vision can change the world. They
attract investors who think and encourage people who think out of the box. The research focuses
on a scalable business and experimental models, so, they hire the best and the brightest
employees. They require more venture capital to fuel and back their project or business.

Large Company Entrepreneurship-

These huge companies have defined life-cycle. Most of these companies grow and sustain by
offering new and innovative products that revolve around their main products. The change in
technology, customer preferences, new competition, etc., build pressure for large companies to
create an innovative product and sell it to the new set of customers in the new market. To cope
with the rapid technological changes, the existing organisations either buy innovation enterprises
or attempt to construct the product internally.
Social Entrepreneurship-

This type of entrepreneurship focuses on producing product and services that resolve social
needs and problems. Their only motto and goal is to work for society and not make any profits.

Characteristics of Entrepreneurship:

Not all entrepreneurs are successful; there are definite characteristics that make entrepreneurship
successful. A few of them are mentioned below:

 Ability to take a risk- Starting any new venture involves a considerable amount of
failure risk. Therefore, an entrepreneur needs to be courageous and able to evaluate and
take risks, which is an essential part of being an entrepreneur.

 Innovation- It should be highly innovative to generate new ideas, start a company and
earn profits out of it. Change can be the launching of a new product that is new to the
market or a process that does the same thing but in a more efficient and economical way.

 Visionary and Leadership quality- To be successful, the entrepreneur should have a

clear vision of his new venture. However, to turn the idea into reality, a lot of resources
and employees are required. Here, leadership quality is paramount because leaders impart
and guide their employees towards the right path of success.

 Open-Minded- In a business, every circumstance can be an opportunity and used for the
benefit of a company. For example, Paytm recognised the gravity of demonetization and
acknowledged the need for online transactions would be more, so it utilised the situation
and expanded massively during this time.

 Flexible- An entrepreneur should be flexible and open to change according to the

situation. To be on the top, a businessperson should be equipped to embrace change in a
product and service, as and when needed.

 Know your Product-A company owner should know the product offerings and also be
aware of the latest trend in the market. It is essential to know if the available product or
service meets the demands of the current market, or whether it is time to tweak it a little.
Being able to be accountable and then alter as needed is a vital part of entrepreneurship.
 Importance of Entrepreneurship:

 Creation of Employment- Entrepreneurship generates employment. It provides an entry-

level job, required for gaining experience and training for unskilled workers.

 Innovation- It is the hub of innovation that provides new product ventures, market,
technology and quality of goods, etc., and increase the standard of living of people.

 Impact on Society and Community Development- A society becomes greater if the

employment base is large and diversified. It brings about changes in society and promotes
facilities like higher expenditure on education, better sanitation, fewer slums, a higher
level of homeownership. Therefore, entrepreneurship assists the organisation towards a
more stable and high quality of community life.

 Increase Standard of Living- Entrepreneurship helps to improve the standard of living

of a person by increasing the income. The standard of living means, increase in the
consumption of various goods and services by a household for a particular period.

 Supports research and development- New products and services need to be researched
and tested before launching in the market. Therefore, an entrepreneur also dispenses
finance for research and development with research institutions and universities. This
promotes research, general construction, and development in the economy.

Qualities of a Successful Entrepreneur

Successful business people have many traits in common with one another Here are ten traits of
the successful entrepreneur.

1. Disciplined
These individuals are focused on making their businesses work, and eliminate any hindrances or
distractions to their goals. They have overarching strategies and outline the tactics to accomplish
them. Successful entrepreneurs are disciplined enough to take steps every day toward the
achievement of their objectives.

2. Confidence
The entrepreneur does not ask questions about whether they can succeed or whether they are
worthy of success. They are confident with the knowledge that they will make their businesses
succeed. They exude that confidence in everything they do.

3. Open Minded
Entrepreneurs realize that every event and situation is a business opportunity. Ideas are
constantly being generated about workflows and efficiency, people skills and potential new
businesses. They have the ability to look at everything around them and focus it toward their
goals.

4. Self Starter
Entrepreneurs know that if something needs to be done, they should start it themselves. They set
the parameters and make sure that projects follow that path. They are proactive, not waiting for
someone to give them permission.

5. Competitive
Many companies are formed because an entrepreneur knows that they can do a job better than
another. They need to win at the sports they play and need to win at the businesses that they
create. An entrepreneur will highlight their own company’s track record of success.

6. Creativity
One facet of creativity is being able to make connections between seemingly unrelated events or
situations. Entrepreneurs often come up with solutions which are the synthesis of other items.
They will repurpose products to market them to new industries.

7. Determination
Entrepreneurs are not thwarted by their defeats. They look at defeat as an opportunity for
success. They are determined to make all of their endeavors succeed, so will try and try again
until it does. Successful entrepreneurs do not believe that something cannot be done.
8. Strong people skills
The entrepreneur has strong communication skills to sell the product and motivate employees.
Most successful entrepreneurs know how to motivate their employees so the business grows
overall. They are very good at highlighting the benefits of any situation and coaching others to
their success.

9. Strong work ethic

The successful entrepreneur will often be the first person to arrive at the office and the last one to
leave. They will come in on their days off to make sure that an outcome meets their expectations.
Their mind is constantly on their work, whether they are in or out of the workplace.

10. Passion
Passion is the most important trait of the successful entrepreneur. They genuinely love their
work. They are willing to put in those extra hours to make the business succeed because there is
a joy their business gives which goes beyond the money. The successful entrepreneur will
always be reading and researching ways to make the business better.

Successful entrepreneurs want to see what the view is like at the top of the business mountain.
Once they see it, they want to go further. They know how to talk to their employees, and their
businesses soar as a result.
 Barriers to Entrepreneurship

1. Finances

We are all bustling with ideas that are unique and can make for an amazing business start-up. But
no matter how good your idea is, you will always need stable finances and funding from the
investors to begin the process and take the first step towards your journey of entrepreneurship.

And getting a sound financial investment or funding can be one of the biggest Barriers to
Entrepreneurship as many of banks, private investors, angel investors, and organizations find it
quite difficult to believe in the start-up ideas owing to the risk of failure and losing their money.

2. Fear of not to be a success

We all go through the fear of failure. And if the fear is associated with the risks and stakes taken
in the stream of business and entrepreneurship, the level of fear elevates.

there is a fear if we are on the right track, is the idea worthwhile, will there be profit, will I find
investors, and various such fears and tensions act as the Barriers to Entrepreneurship.

3. No strategic plan in place

Lack of proper planning and strategy in place is one of the most common Barriers to
Entrepreneurship. Many of us think to build a business out of a hobby without having any sort of
long term and short term vision and plan in mind.

Running a fully-fledged business or being an entrepreneur requires a huge amount of skill set,
passion for excelling, strategic vision, the mission to accomplish the goals, market research, and
a lot more.

Right from the target market, finances, human resources, to a proper strategic plan is required to
build a successful business or a brand in the market.

4. Human resource issues

Entrepreneurs cannot handle and run a business alone by themselves. We require the support of
human resource to carve a niche in the market.

Employees with the required knowledge, expertise, and experience are needed for
the efficiency of the business processes and high levels of productivity

First of all, it is quite difficult to find the employees that share the same vision and wavelength of
the business. Plus paying a hefty annual or even a monthly retainer income is a problem of the
start up’s as the finances at hand are always limited, and the overheads and expenses are also to
be taken care of And secondly, it is also difficult to manage human resources as each of us work
with a different mindset and perspective. Hence, human resources and employees can be as one
of the Barriers to Entrepreneurship.

5. Fewer opportunities

Even though there is a lot of talent pool in the market with the aspiring entrepreneurs buzzing
with the ideas, but the opportunities presented to them are quite less and fewer.

reasons such as nepotism and corruption act as the Barriers to Entrepreneurship with not many
vital and lucrative opportunities.

6. Lack of capacity

Even if there are opportunities presented to the aspiring entrepreneurs, there is a lack of capacity
in some them to embrace the opportunities with open arms. The reasons can vary from lack of
knowledge, lack of education, lack of willingness, lack of strategic knowledge, and cultural
hindrances amongst others; but the factor of motivation and zeal gets missing.

To start a new business venture amidst all the risks and market-related issues, it requires a lot of
hard work, passion, and high capacity to handle all of it.

7. Lack of risk-taking capacity

It is always said that entrepreneurs never sail in safe waters and are never confined to their
comfort zones. Lack of risk-taking capacity is the psychological mindset and perspective towards
the business and acts as one of the major Barriers to Entrepreneurship.

8. Corrupt business situations

As mentioned earlier, if the business situations and the environment are not very supportive and
corrupt for the young and aspiring entrepreneurs, it acts as one of the top Barriers to
Entrepreneurship.

Bribing, rampant corruption, unfriendly ties of government with other nations, inconsistent laws,
stringent compliances, and enforcing regulations that are unhealthy and negative in their
approach hamper the growth of businesses in the country.

9. Inadequate training

With no proper education, development, training, entrepreneurial skills, and technical know-how
acts as the Barriers to Entrepreneurship.

10. Lack of practical knowledge

Having a strong educational background is just not enough to pursue business as it requires
practical knowledge as well to stay relevant amidst the various market cycles. And many
entrepreneurs lack practical knowledge.

Sole Proprietorship
 What Is a Sole Proprietorship?

A sole proprietorship also referred to as a sole trader or a proprietorship, is an unincorporated

business that has just one owner who pays personal income tax on profits earned from the
business.

A sole proprietorship is the easiest type of business to establish or take apart, due to a lack of
government regulation. As such, these types of businesses are very popular among sole owners
of businesses, individual self-contractors, and consultants. Many sole proprietors do business
under their own names because creating a separate business or trade name isn't necessary.

Example of Sole Proprietorship

Most small businesses start as sole proprietorships but end up evolving into different legal
structures as time passes and the company grows. For example, in 2005, Kate Schade started her
company, Kate's Real Food, as a sole proprietor. The company creates and sells energy bars, and
it began as a local vendor in Schade's hometown of Victor, Idaho. The sole proprietorship sold
its energy bars at local farmer's markets and then expanded to sell online and to a few accounts in
Jackson, Idaho.

Since 2005, Kate's Real Food has grown to supply accounts across the country. She restructured
the business from a sole proprietorship to a corporation to take on investments and expand,
which is a natural step for a growing business.

Partnership and Forms

These come in two types:

general and limited.

In general partnerships, both owners invest their money, property, labor, etc. to the business and
are both 100% liable for business debts. In other words, even if you invest a little into a general
 partnership, you are still potentially responsible for all its debt. General partnerships do not
require a formal agreement—partnerships can be verbal or even implied between the two
business owners.

Limited partnerships require a formal agreement between the partners. They must also file a
certificate of partnership with the state. Limited partnerships allow partners to limit their own
liability for business debts according to their portion of ownership or investment.

Advantages of partnerships:

 Shared resources provides more capital for the business

 Each partner shares the total profits of the company
 Similar flexibility and simple design of a proprietorship
 Inexpensive to establish a business partnership, formal or informal

Disadvantages:

 Each partner is 100% responsible for debts and losses

 Selling the business is difficult—requires finding new partner
 Partnership ends when any partner decides to end it

Corporation

Corporations are, for tax purposes, separate entities and are considered a legal person. This
means, among other things, that the profits generated by a corporation are taxed as the “personal
income” of the company. Then, any income distributed to the shareholders as dividends or
profits are taxed again as the personal income of the owners.

Advantages of a corporation:

 Limits liability of the owner to debts or losses

 Profits and losses belong to the corporation
 Can be transferred to new owners fairly easily
 Personal assets cannot be seized to pay for business debts
 Disadvantages:

 Corporate operations are costly

 Establishing a corporation is costly
 Start a corporate business requires complex paperwork
 With some exceptions, corporate income is taxed twice

Limited Liability Company (LLC)

Similar to a limited partnership, an LLC provides owners with limited liability while providing
some of the income advantages of a partnership. Essentially, the advantages of partnerships and
corporations are combined in an LLC, mitigating some of the disadvantages of each.

Advantages of an LLC:

 Limits liability to the company owners for debts or losses

 The profits of the LLC are shared by the owners without double-taxation

Disadvantages:

 Ownership is limited by certain state laws

 Agreements must be comprehensive and complex
 Beginning an LLC has high costs due to legal and filing fees

Cooperative
A cooperative is a business organization owned by a group of individuals and is operated for
their mutual benefit. The persons making up the group are called members. Cooperatives may be
incorporated or unincorporated.

Some examples of cooperatives are: water and electricity (utility) cooperatives, cooperative
banking, credit unions, and housing cooperatives.