ENTREPRENEURSHIP DEVELOPMENT

AND
SMALL BUSINESS MANANGEMENT

UNIT-1
INTRODUCTION TO ENTREPRENEURSHIP
Meaning:
Entrepreneurship refers to the functions performed by an entrepreneur in establishing an
enterprise. In other words, it is a process involving various actions to be undertaken to establish
an enterprise.

Definitions: -
According to A.H. Cole “Entrepreneurship is the purposeful activity of an individual or a group
of associated individuals, undertaken to initiate, maintain or aggrandize profit by production or
distribution of economic goods and services.

“Entrepreneurship is essentially a creative activity or it is an innovation function. the process

of innovation may be in the form of

(a) Introduction of a new product

(b) Use of new method of production.
(c) Opening of a new market.
(d) The conquest of new source of supplying raw material.
(e) A new form of organization.” Joseph A Schumpeter

“Entrepreneurship is neither a science nor an art. It is a practice. It has a knowledge base.

Knowledge in entrepreneurship is a means to an end. Indeed, what constitutes knowledge in
practice is largely defined by the ends, that is, by the practice”. Peter F. Drucker

Characteristics of Entrepreneurship
Entrepreneurship is the tendency of a person to organise the business of his own and to run it
profitably, using various traits like leadership, decision making, innovation, managerial calibre
etc. Entrepreneurship is a set of activities performed by an entrepreneur in a way, entrepreneur
precedes entrepreneurship. The main features of entrepreneurship are as follows:
(i)Economic Activity: Cantillon pointed out that entrepreneurship involves conscious decision
making about resource allocations. It also implies seeking the best opportunities for using
resources for their highest commercial yields. Adam Smith viewed that there was no difference
between an entrepreneur and an industrialist. He agreed that economic change could be brought
through entrepreneurs.

Entrepreneurship is a continuous economic process which recognises the need to change and
an entrepreneur is a key person to initiate any change.

Schumpeter’s argument was that all important changes in the economy are set off by an
entrepreneur and then these changes slowly work themselves through economic system, in the
form of a business cycle.

(ii) Innovative Activity: Innovation is the process of doing new things. Drucker elaborates:
“Innovation ……is the means by which the entrepreneur either creates new wealth producing
resources or endows existing resources with enhanced potential for creating wealth”.
Entrepreneurship is innovation where new products, services, ideas and information is
produced, new efficient production techniques are introduced by the firms, new market
opportunities are identified and better ways of meeting existing to convert the idea into
practical application. According to Schumpeter, innovation may occur in any of the following
ways:

• The introduction of a new good with which the customer is not yet familiar;
• The introduction of a new method of production which is not tested by experience in
the branch of manufacture concerned;
• The opening of a new market where the customers are not familiar with the product and
market for that innovative product hasn’t previously been entered;
• The conquest of a new source of supply of raw material irrespective of the fact whether
that source already exists or it has been created;
• The creation of a new organisation of an industry- a new innovation may create the
monopoly for that product or break the monopoly of similar existing product.

Thus, Joseph Schumpeter described entrepreneurship as a force of “creative destruction”

whereby established ways of doing things are destroyed by the creation of new and better ways
to get things done. Entrepreneurship is often a subtle force, which challenges the order of the
society through marginally small changes. Schumpeter’s entrepreneurship is extraordinarily
powerful like converting the crude oil into energy source, attempting to tap the solar energy for
cooking, for automobile fuelling etc.

(iii)A Function of High Achievement: People differ not only in their ability to do but also in
their will to do, or motivation. The motivation, in turn, depends on the strength of their motives
sometimes defined as needs, wants, drives or impulses within the individuals. McClelland
identified two features of entrepreneurship (a) doing things in a different and better way (b)
decision making under uncertainty. He found that looking at the history of industrial
development, money of the pioneers who built up industrial empires is strongly motivated by
need for power and achievement. Thus, people having high need for achievement and power
are more likely to succeed as entrepreneurs and this is a very critical factor that leads one
toward entrepreneurship. Researchers also show that stable personality characteristic like
motive is laid down in childhood.

David McClelland also stressed that entrepreneurs are highly motivated by challenging and
competitive work situations.

(iv)Creative and Purposeful Activity: Creativity is the “ability to bring something new into
existence”. The definition emphasises on “ability” and not the “activity” of bringing something
new into existence. A person may conceive of something new and also visualize its usefulness
but unless he takes necessary action to convert it into reality, his ideas will not be termed as
creative. Innovation is the process of doing new things. Innovation, therefore is the
transformation of creative ideas into useful application, but creativity is a prerequisite to
innovation.

Entrepreneurship is virtually a creative and a purposeful activity. The entrepreneur passes

through the five stages during the process of entrepreneurship viz. idea germination,
preparation, incubation, illumination and verification. Earning profits is never the sole
objective but to introduce something new and creative is the purpose of entrepreneurship. The
benefits of his creativity are enjoyed by people at large. E.g., Internet benefits are being enjoyed
by more than 50 million people all over the world.

(v)Entrepreneurship: An Organising Function- J.B. Say describes entrepreneurship as an

organising function whereby the entrepreneur brings together various factors of production,
ensures the continuing management and renders risk-bearing function as well. According to
J.B. Say, an entrepreneur is one who combines the land of one, the labour of another, and
capital of yet another, and thus products a product. By selling the product in the market, he
pays interest on capital, rent on land, wages to labourers and what remains is his profit. Thus,
J.B. Say clearly distinguishes between the role of a capital as a financer and the entrepreneur
as an organiser. Marshall also advocated the significance of organisation among the services
of special class of business undertakes.

(vi)Entrepreneurship: A function of risk bearing- Richard Cantillon, an Irishman living in

France is credited with giving the concept of entrepreneurship. Cantillon described in his book
published in 1755, an entrepreneur as a person who buys things at a certain price and sells them
at an uncertain price. Thus, he makes decisions about obtaining and using resources while
consequently assuming the risk of enterprise. Thus, Cantillon conceived an entrepreneur as a
bearer of non-insurable risk. According to him, risk bearing forms unique constitutive function
of entrepreneurship. He gives the example of a farmer. The farmer pays out contractual
incomes which are ‘certain’ to the landlords and labourers and sells at prices that are
‘uncertain’.

Thus, entrepreneurship is meant to be something new, organising, co-ordinating, supervising

and undertaking risk and handling economic uncertainty. As per Higgin, “Entrepreneurship is
meant as the function of seeing investment and production opportunities, organising an
enterprise to undertake and production process, raising capital, hiring labour, arranging the
supply of raw materials, finding site, introducing a new technique and commodities,
discovering new sources of raw materials and selecting top managers for day-to-day operations
of the enterprise.

Entrepreneurship V/S Enterprise

Entrepreneurship Enterprise

Entrepreneurship is commonly Enterprise is a word which is used to

referred to as a process of setting up refer to the already existing and
one’s own business and at the same established business selling
time have the capabilities to identify particular products or services.
the fruitful opportunities which come
in the way.

It is the act of forming an It is a company or the organization

organization/company
 Entrepreneurship is passionate fearless Enterprise is the final dream
living dream

ENTREPRENEUR
Meaning:
In simple words, the term ‘entrepreneur’ refers to a person who creates an enterprise or an
economic unit.

An entrepreneur is a person responsible for setting up a business or an enterprise. He is one

who has the initiative, skill or innovation and always looks for higher achievements. He works
for the good of people and catalytic agent for change.

Definition:
Peter F Drucker defines an entrepreneur as the one who always searches for change, responds
to it and exploits it as an opportunity. Drucker states that innovation is the specific tool for
entrepreneurs, the means by which they exploit changes as an opportunity for different business
or service. It is capable of being presented as a discipline, capable of being learnt, capable of
being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the
changes and their symptoms that indicate opportunities for successful innovation. And they
need to know and to apply the principles of successful innovation. Further he says that:

i. An entrepreneur should not try to be clever in design or execution otherwise he is bound

to fail.
ii. He should innovate for the present and not for the future.
iii. Innovation should be simple otherwise it would not work.
iv. Innovation requires knowledge, ingenuity, diligence, persistence and commitment.
v. An entrepreneur must be an innovator as well as a leader.
vi. An entrepreneur must be capable of analysing the opportunities and exploit them
successfully.

Functions of Entrepreneurs
In practice, an entrepreneur does perform all the functions necessary right from the genesis
of a business idea up to the establishment of an enterprise.
I)Managerial Functions

In simple words, management is getting thing working with and through others. Different
experts have defined term management differently. According Henry Fayol (1949) who is
considered the father of ‘principles of management’, “management is to forecast, to plan, to
organise, to command, to co-ordinate and to control”. In the opinion of George Terry(1953),
“management is a distinct process consisting of planning, organising, actuating, and controlling
performance to determine and accomplish the objectives by the use of people and resources”.
The significance of management function lies in the fact that enterprises with excellent
facilities and quality resources have floundered and fizzled out due to either no management
or poor management and enterprises with good management but with poor facilities and
resources have flourished and performed exceedingly well. In small-scale enterprises, the
entrepreneur who is the owner of the enterprise also , has to perform the management functions
as well. The management functions performed by entrepreneur are classified into the following
five types:

1.Planning

2.Organising

3.Staffing

4.Directing

5.Controlling

1.Planning: In common parlance, planning is pre-determined course of action to accomplish

the set of objectives. In other words, planning is today’s projection for tomorrow’s activity.
Planning pervades in all aspects of business. An entrepreneur has to make decisions as to what
is to be done, how it is to be done, when it is to be done, by whom it is to be done and so on.
The importance of planning lies in the fact that it ensures the smooth and effective completion
and running of a business enterprise. Absence of planning causes confusion which in turn,
affects the smooth performance of job whatsoever it may be.

2.Organising: the organising function of an entrepreneur refers to bringing together the men,
material, machine, money, etc. to execute the plans. The entrepreneur assembles and organises
the above-mentioned different organs of an enterprise in such a way that these combinedly start
functioning as one, i.e., enterprise. Thus, organising function of an entrepreneur ultimately
provides a mechanism for purposive, integrated and co-operative action by many people in a
joint and organised effort to implement a business plan.

3.Staffing: Staffing involves human resource planning and human resource management.
Thus, staffing function of an entrepreneur includes preparing inventory of personnel available,
requirement of personnel, sources of manpower recruitment, their selection, remuneration,
training and development and periodic appraisal of personnel working in the enterprise.
Business history is replete with evidences that is basically the staff, i.e., personnel working in
the organisation that makes all the difference. While appreciating the role of personnel in the
success of an organisation.

4.Directing: The functions like planning, organising and staffing are merely preparations for
setting up a business enterprise. The directing function of entrepreneur actually starts the
setting up of enterprise. Under the directing function, the entrepreneurs guide, counsels,
teaches, stimulates and activates his/her employees to work efficiently to accomplish the set
objectives. Thus, directing function of entrepreneur concerns the total manner in which an
entrepreneur influences the actions of his/her employees/workers. It is the final action of an
entrepreneur in making his/her employees actually act after all preparations have been
completed.

5.controlling: controlling is the last management function performed by the entrepreneur. In

simple words, controlling means to see whether the activities have been performed in
conformity with the plans or not. Thus, controlling is comparison of actual performance with
the target or standard performance and identification of variation between the two, if any, and
taking corrective measures so that the target is accomplished.

II)Promotional functions

1.Identification and Selection of Business Idea: Every intending entrepreneur wants to start
the most profitable and rewarding project. The selection of the most suitable business project
involves a process. The intending entrepreneur, based on his /her knowledge, experience and
information gathered from friends and relatives, generates some possible business ideas which
can be examined and pursued as a business enterprise. This process is also described as
‘opportunity scanning and identification’. Then, the generated ideas are analysed in terms of
costs and benefits associated with them. Having made cost-benefit analysis of all the ideas, the
most beneficial idea is finally selected to be pursued as business enterprise.
2.Preparation of Business Plan or Project Report: The entrepreneur prepares a statement
called ‘business plan’ or ‘project report’ of what he/she proposes to take up. In other words,
business plan is a well evolved course of action devised by entrepreneur to achieve the specified
objectives within a specified period time. In this sense, business plan is just like an operating
document. The preparation of business plan is not must, but it is very much useful for the
entrepreneur to establish his/her enterprise in an effective and smooth manner. But it is must
for those entrepreneurs who intend to apply for financial assistance from the financial
institutions and banks for the enterprises. It contains information about the intending
entrepreneur, location of enterprise, requirement for land and building, plant and machinery,
raw material, utilities, transport and communication, manpower, requirement for funds
including working capital along with its sources of supply, break-even point and
implementation schedule of the project.

3. Requirement for Finance: The entrepreneur prepares requirement for funds with its detailed
structure. The financial requirement is also classified into short-term and long-term separately.
Then, the sources of supply to acquire the required fund are also mentioned. How much will
the share capital in terms of equity and preference shares and how much will be borrowed
capital from different financial institutions and banks are clearly determined.

3.Commercial Functions

1.Production/Manufacturing: once the enterprise is finally established, it starts producing

goods or offering services, whichever be the case. Production function includes decisions
relating to the selection of factory site, design and layout, types of products to be produced,
research and development, and design of the product. The ancillary activities include
production planning and control, maintenance and repair, purchasing, store-keeping, and
material handling. The effective performance of production function to a large extent, depends
on the proper production planning and control.

2.Marketing: all production is basically meant for marketing. Marketing is the performance of
those business activities that direct the flow of goods and services from producer to consumer
or user. Thus, marketing essentially begins and ends with the customers. It is important to note
that marketing is not just selling. In fact, marketing includes much more than selling. Selling
is the last function in marketing activities. The examples of marketing activities are market or
consumer research, product planning and development, standardisation, packaging, pricing,
storage, promotional activities, distribution channel, etc. Th success of marketing function is
linked with an appropriated ‘marketing mix’.

3.Accounting: the main objective of any business enterprise is to earn profits and create wealth.
Whether the business is fulfilling it objective or not is ascertained through accounting.
“Accounting is the art of recoding, classifying and summarizing in a significant manner, and
in terms of money, interpreting the results thereof”. Thus, accounting involves a process
consisting of the following four stages;

Recording the transactions

Classifying the transactions

Summarising the transactions

Preparing the final accounts

Analysing and interpreting the results.

The profit and loss account is prepared for ascertaining whether the business earned profit or
incurred loss during a particular period of time also called ‘accounting year,. The balance sheet
is prepared to know the financial position of business during the accounting period. Hence, the
Balance sheet is also called ‘Position Statement’.

Types of Entrepreneur
I)Based on the Type of Business
1.Trading Entrepreneurs: As the name itself suggests, the trading entrepreneur undertake the
trading activities. They procure the finished products from the manufacturers and sell these to
the customers directly or through a retailer. These serve as the middlemen as wholesalers,
dealers, and retailers between the manufacturers and customers.

2.Manufacturing Entrepreneur: The manufacturing entrepreneurs manufacture products.

They identify the needs of the customers and, then, explore the resources and technology to be
used to manufacture the products to satisfy the customers needs. In other words, the
manufacturing entrepreneurs convert raw materials into finished products

3. Agricultural Entrepreneur: the entrepreneurs who undertake agricultural pursuits are called
agricultural entrepreneurs. They cover a wide spectrum of agricultural activities like
cultivation, marketing of agricultural produce, irrigation, mechanization and technology.
II) Based on the Use of Technology
1.Technical Entrepreneur: The entrepreneurs who establish and run science and technology-
based industries are called ‘technical entrepreneurs’. Speaking alternatively, these are the
entrepreneurs who make use of science and technology in their enterprises. Expectedly, they
use new and innovative methods of production in their enterprises.

2.Non-Technical Entrepreneur: Based on the use of technology, the entrepreneurs who are
not technical entrepreneurs are non- technical entrepreneurs. The forte of their enterprises is
not science and technology. They are concerned with the use of alternative and imitative
methods of marketing and distribution strategies to make their business survive and thrive in
the competitive market.

III) Based on Ownership

1.Private Entrepreneur: A private entrepreneur is one who as an individual sets up a business

enterprise. He/she it’s the sole owner of the enterprise and bears the entire risk involved in it.

2.State Entrepreneur: When the trading or industrial venture is undertaken by the state or the
Government, it is called ‘state entrepreneur’.

3.Joint Entrepreneur: When a private entrepreneur and the government jointly run a business
enterprise, it is called ‘joint entrepreneurs.

IV)Based on Gender

1.Men Entrepreneurs: When business enterprises are owned, managed, and controlled by
men, these are called ‘men entrepreneurs.

2.Women Entrepreneurs: Women entrepreneurs are defined as the enterprises owned and
controlled by a women or women having a minimum financial interest of 51 percent of the
capital and giving at least 51 percent of employment generated in the enterprises to women.

V)Based on the Size of Enterprise

1.Small-scale Entrepreneur: An entrepreneur who has made investment in plant and

machinery up to Rs.1 crore is called ‘small scale entrepreneur’.

2. Medium -scale Entrepreneur: The entrepreneur who has made investment in plant and
machinery above Rs. 1 crore but below Rs.5 crore is called ‘medium scale entrepreneur’.
3. Large-scale Entrepreneur: The entrepreneur who has made investment in plant and
machinery more than Rs.5 crore is called ‘large scale entrepreneur’.

VI)Based on Clarence Danhof Classification

Clarence Danhof (1949), on the basis of his study of the American Agriculture, classified
entrepreneurs have less initiative and drive and as economic development proceeds, they
become more innovating and enthusiastic. Based on this, he classified entrepreneurs into four
types.

1.Innovating Entrepreneurs: Innovating entrepreneurs are one who introduce new goods,
inaugurate new method of production, discover new market and reorganise the enterprise. It is
important to note that such entrepreneurs can work only when a certain level of development
is already achieved, and people look forward to change and improvement.

2.Imitative Entrepreneurs: These are characterised by readiness to adopt successful

innovations inaugurated by innovating entrepreneurs. Imitative entrepreneurs do no innovate
the changes themselves; they only imitate techniques and technology innovated by others. Such
types of entrepreneurs are particularly suitable for the underdeveloped regions for bringing a
mushroom drive of imitation of new combinations of factors of production already available in
developed regions.

3.Fabian Entrepreneurs: Fabian entrepreneurs are characterised by very great caution and
skepticism in experimenting any change in their enterprises. They imitate only when it becomes
perfectly clear that failure to do so would result in a loss of the relative position in the
enterprise.

4.Drone Entrepreneurs: these are characterised by a refusal to adopt opportunities to make

changes in production formulae even at the cost of severely reduced returns relative to other
life producers. Such entrepreneurs may even suffer from losses but they are not ready to make
changes in their existing production methods.

Intrapreneur

Of late, a new breed of entrepreneurs is coming to the fore in large industrial organisations.
They are called ‘intrapreneurs’. They emerge from within the confines of an existing enterprise.
According to Gifford Pinchot (1985), “Intrapreneur is an entrepreneur within an already
established organisation”. In big organisations, the top executives are encouraged to catch hold
of new ideas and then convert these into products through research and development activities
within the frame work of organisation. The concept of intrapreneurship has become very
popular in developed countries like America. It is found that an increasing number of
intrapreneurs is leaving their jobs in big organisations and is starting their own enterprises.
Many of such intrapreneurs have become exceedingly successful in their ventures. What is
more that they are causing a threat to the organisations they left? Such intrapreneurs breed to
the innovative entrepreneurs who inaugurate new products.

Qualities of Successful Entrepreneurs

1.Hard Work: Willingness to work hard distinguishes a successful entrepreneur from
unsuccessful one. Most of the successful entrepreneurs work hard endlessly, especially in the
beginning and the same becomes their habit for their whole life.

2.Desire for High Achievement: The entrepreneurs have a strong desire to achieve high goals
in business. This high achievement motive strengthens them to surmount the obstacles,
suppress anxieties, repair misfortunes, and devise expedients and set up an run a successful
business (McClelland 1961).

3.Highly Optimistic: The successful entrepreneurs have a positive approach toward things.
They do no get disturbed by the present problems faced by them. They become optimistic for
future that the situations will become favourable to business in future.

4.Independence: One of the common qualities of the successful entrepreneurs has been that
they do not like to be guided by others and to follow their rules. They resist to be pigeonholed.
They like to be independent in the matters of their business.

5.Foresight: The entrepreneurs have a good foresight to know about future business
environment. In other words, they well visualize the likely changes to take place in market,
consumer attitude and taste, technological developments, etc. and take necessary and timely
actions accordingly.

6.Good Organiser: Various resources required for production are owned by different owners.
Then, it is the ability of the entrepreneur who brings together all required resources for setting
up an enterprise and then produces goods.

7.Innovative: Production is meant to meet the customers requirements. In view of the changing
requirements of the customers from time to time, the entrepreneurs initiate research and
innovative activities to produce goods to satisfy the customers changing environment and
demands for the products. The research centres/institutes established by Tata, Birla, Kirloskar,
etc., are examples of the innovative activities taken by the entrepreneurs in our country.

8.Perseverance:one of the qualities of successful entrepreneurs is the possess and exhibit

tremendous perseverance in their pursuits. They do not give up their effort even if they fail.
They undergo lots and lots of failures, but do not become disheartened. Instead, they take
failure as learning experience and make more dedicated and serious effort on the next time.
And, ultimately become successful.

9.Team Spirit: The word ‘Team’ refers to T for Together, E for Everyone, A for Achieves and
M for more. Team results in synergy. Successful entrepreneurs build teams and work with
teammates. In simple words, team is a group of individuals who work in a face-to-face
relationship to achieve a common goal. The share collective accountability for the outcome of
the team’s effort. Working in teams creates synergy and achieves success in its endeavours.

Entrepreneur V/S Professional Manager

POINTS PROFESSIONAL ENTREPRENEUR

MANAGER
Motive The main motive of a But the main motive of an
professional manager is to entrepreneur is to start a
render his services in an venture by setting up an
enterprise already started by enterprise. He starts an
others enterprise for his personal
gratification.
Status A professional manager is An entrepreneur is the owner
the servant in enterprise of the enterprise.
owned by an entrepreneur
Risk bearing A professional manager does An entrepreneur undertakes
not undertake to bear the risk to bear the risk of loss of all
since he is a mere servant. kinds. Because, he is the
owner of the enterprise.
Rewards A professional manager gets The reward an entrepreneur
salary as a reward for his gets for his sacrifice is in the
services. Salary is certain and
fixed.
Innovation A professional manager do An entrepreneur is
not assume the responsibility essentially an innovator. He
of innovation. He simply himself think over what and
translates the entrepreneurs’ how to produce products to
 ideas into practices. He is an
meet the changing demands
administrator. of customers. He is a planner.
Qualification A professional manager An entrepreneur need not
needs to posses a distinctposses any distinct
qualification. He must
qualification. He need not
possess a requisite degreepossess any degree
qualification from a
qualification of any
recognized institution apart
institution/university.
from intelligence and sound
However, intelligence, hard
knowledge. work, sound knowledge etc.
are desirable.
Commitment He should be loyal to the He is committed in the
organisation organisation

WOMEN ENTREPRENEURS
Women constitute about 50% of the world population. In traditional societies, they are
confined to performing household activities. Hence women are generally called home makers.
But today, in modern society, they have moved out of the house and are taking part in all areas
of life. Today, the entrepreneurial world is open to the womenfolk. Thailand tops the list with
18.5% of women as entrepreneurs followed by India with 14.1% women entrepreneurs. Japan
has the lowest rate of women entrepreneurs with just 0.6% women as entrepreneurs.

THE CONCEPT OF WOMEN ENTREPRENUERSHIP According to the general concept,

women entrepreneur may be defined as a woman or a group of women who initiate, organize
and operate a business enterprise. The Government of India has defined a women
entrepreneurship as “an enterprise owned and controlled by a woman having a minimum
financial interest of 51% of the capital and giving at least 51% of the employment generated in
the enterprise to women”. Kerala Government defined women industrial units as units owned/
organized by women and engages in small scale and cottage industries with not less than 80%
of the total workers as women. With effect from 6th Feb. 1992, the definition of ‘Women
Entrepreneurs’ Enterprises is as follows: “A small scale industrial units/industrially related
services or business enterprise managed by one or more women entrepreneurs in proprietary
concerns in which she/they will individually or jointly have share capital of not less than 51%
as partners/ shareholders / directors of private limited company, members of co-operative
society”.

PROBLEMS OF WOMEN ENTREPRENEURS

The basic problem of a woman entrepreneur is that she is a woman. Women entrepreneurs
face two sets of problems specific to women entrepreneurs.

These are summarized as follows.

1) Shortage of Finance: Women and small entrepreneurs always suffer from inadequate fixed
and working capital. Owing to lack of confidence in women’s ability, male members in the
family do not like to risk their capital in ventures run by women. Banks have also taken negative
attitude while lending to women entrepreneurs. Thus, women entrepreneurs rely often on
personal saving and loans from family and friends.

2) Shortage of Raw Material: Women entrepreneurs find it difficult to procure material and
other necessary inputs. The prices of many raw materials are quite high.

3) Inadequate Marketing Facilities: Most of the women entrepreneurs depend on intermediaries

for marketing their products. It is very difficult for the women entrepreneurs to explore the
market and to make their product popular. For women, market is a ‘chakravyuh’.

4) Keen Competition: Women entrepreneurs face tough competition from male entrepreneurs
and also from organized industries. They cannot afford to spend large sums of advertisement.

5) High Cost of Production: High prices of material, low productivity. Underutilisation of

capacity etc. account for high cost of production. The government assistance and subsidies
would not be sufficient for the survival.

6) Family Responsibilities: Management of family may be more complicated than the

management of the business. Hence, she cannot put her full involvement in the business.
Occupational backgrounds of the family and education level of husband has a direct impact on
the development of women entrepreneurship.

7) Low Mobility: One of the biggest handicaps for women entrepreneur is her inability to travel
from one place to another for business purposes. A single woman asking for room is looked
upon with suspicion. Sometimes licensing authorities, labour officials and sales tax officials
may harass them.

8) Lack of Education: About 60% of women are still illiterate in India. There exists a belief
that investing in woman’s education is a liability, not an asset. Lack of knowledge and
experience creates further problems in the setting up and operation of business.
9) Low Capacity to Bear Risks: Women lead a protected life dominated by the family members.
She is not economically independent. She may not have confidence to bear the risk alone. If
she cannot bear risks, she can never be an entrepreneur.

10) Social Attitudes: Women do not get equal treatment in a male dominated society. Wherever
she goes, she faces discrimination. The male ego stands in the way of success of women
entrepreneurs. Thus, the rigid social attitudes prevent a woman from becoming a successful
entrepreneur.

11) Low Need for Achievement: Generally, a woman will not have strong need for
achievement. Every woman suffers from the painful feeling that she is forced to depend on
others in her life. Her pre-conceived notions about her role in life inhibit achievement and
independence.

12) Lack of Training: A women entrepreneur from middle class starts her first entrepreneurial
venture in her late thirties or early forties due to her commitments towards children. Her biggest
problem is the lack of sufficient business training.

13) Lack of Information: Women entrepreneurs sometimes are not aware of technological
developments and other information on subsidies and concessions available to them. They may
not know how to get loans, industrial estates, raw materials etc