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Chapter I

Basics of Entrepreneurship

Aim

The aim of this chapter is to:

illustrate the history and evolution of entrepreneurship•

introduce the concept of entrepreneurs, enterprise and entrepreneurship•

explain the concept of intrapreneurship•

distinguish intrapreneur and entrepreneur with traditional manager•

Objectives

The objectives of this chapter are to:

clarify the characteristics of entrepreneurs•

guide students on setting up an enterprise•

enlist skills and resources needed by an entrepreneur•

explain the Indian entrepreneurial economy•

Learning outcome

At the end of this chapter, the students will be able to:

recognise the prominent characteristics of a entrepreneur and know how to venture a successful business•

identify the role of entrepreneurs in building a good business•

examine the entrepreneurial culture •

realise the difference between intrapreneur and entrepreneur•

understand the role of• Indian government in entrepreneurship

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1.1 IntroductionIn India, after completion of education, one has broadly two career options. One can employ oneself in government agencies, public and private sectors, accepting the fixed salary. The other career option is self-employment under which one perceives/innovates an idea, organises production by organising resources and finally markets the products and services. Such persons are called as entrepreneurs. However, it is observed that some of the entrepreneurs achieve success while some of them face huge losses. Why is it so? Is establishing successful business so difficult? How can success be achieved by an enterprise? Why do many initiatives fail?

It is said that some humans have the ability to achieve success by hard work, while others may lack in using their abilities. If this fact is correct, what sort of enterprise one should plan to venture into? What would one need to acquire in terms of skills and resources to make the venture a success? What are the initiatives taken by the government and other agencies to support these kinds of enterprises? This and subsequent chapters are an attempt to find answers to all these questions. Let us try to understand what makes an entrepreneur, and what the ‘entrepreneurship’ is all about.

1.2 The EntrepreneurEntrepreneurs are the people with the ability to create an enterprise where none existed before. They produce • combinations of ideas, skills, money, equipment, and markets that form a successful enterprise.The Merriam-Webster Dictionary defines the term entrepreneurs as, “the one who organises, manages and assumes • the risks of a business or an enterprise.” The term entrepreneur is derived from the French verb ‘enterprendre’, which literally means to undertake something. An entrepreneur can be described as someone who:•

starts his/her own enterprise �manages his/her own enterprise �identifies new products or opportunities �organises and controls resources (like capital, labour, materials) to achieve profit �is creative and innovative �has financial means or who can obtain financing so as to realise the enterprise �has the ability and insight to produce and finance and market a service or product �is willing to take calculated risks �

Some of the famous entrepreneurs are:• Henry Ford (automobiles) �Thomas Edison (electricity/ light bulbs) �Milton S. Hershey (confections) �Jamshedji Tata (Iron and Steel, Textiles) �Sunil Mittal (Telecommunications) �Dhirubhai Ambani (Petrochemicals) �

Ted Turner is another example of entrepreneurial spirit. He launched CNN because he perceived that people • wanted more television news than they were being offered. It took a lot of time for Turner to realise the vision, but he had studied the market thoroughly. In realising the promise of CNN, Turner demonstrated a live scenario of entrepreneurial spirit and persistence.

1.3 Evolution of Entrepreneurship Entrepreneurship is the practice of starting new organisations, particularly new businesses generally in response • to identified opportunities. Entrepreneurial activities differ according to the type of organisation that is being started.

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The understanding of entrepreneurship owes a lot to the work of economist Joseph Schumpeter and Austrian • School of Economics. For Schumpeter (1950), an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation.

1755 - Richard Cantillion: Essal Sur la Nature du Commere on General �1803 - Jean-Babsite Say: A treasure of Political Economy �1921 - Frank Knight: Risk, Uncertainty and Profit �1934 - Joseph Schumpeter: The Theory of Economic Development �1968 - Harvey Leibenstein : Entrepreneurship and Development �1973 - Competition and Entrepreneurship �1973 - Israel Kizner: Competition and Entrepreneurship �1982 - Mark Casson: The Entrepreneur: An Economic Theory �1986 - Peter Drucker and Entrepreneurship �Some notable thinkers and their works in entrepreneurship history

For Frank H. Knight (1967) and Peter Drucker (1970), entrepreneurship is about taking risks. Still, another • view of entrepreneurship is creating and building value from practically nothing. That is, entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently. On the other hand, Howard Stevenson at Harvard University believes that the entrepreneurship is “• the pursuit of opportunity without regard to resources currently controlled.” Thus, entrepreneurship is widely regarded as an integral player in the business culture of life.

1.3.1 Entrepreneurial TraitsAccording to entrepreneurial personality studying literature, there are certain traits that seem to be associated with entrepreneurs. They are as follows:

In 1961, David McClelland described the entrepreneur as primarily motivated by an overwhelming need for • achievement and strong urge to build.Collins and Moore (1970) studied 150 entrepreneurs and concluded that they are tough, realistic people driven • by needs of independence and achievement. They rarely are willing to submit to authority.Bird (1992) views entrepreneurs as mercurial, that is, prone to approaching, brainstorms, deceptions, ingeniousness • and imagination. They are cunning, opportunistic, creative, and tough.Busenitz and Barney (1997) claim entrepreneurs are prone to overconfidence and over generalisations.• According to Cole (1959), there are four types of entrepreneur: •

the innovator �the calculating inventor �the over-optimistic promoter �the organisation builder �

These types are not related to the personality but to the type of opportunity the entrepreneur faces.• Burton W. Folsom, Jr. distinguishes between what he calls a political entrepreneur and a market entrepreneur. • The political entrepreneur uses political influences to gain income through subsidies, protectionism, government-granted monopoly, government contracts, or other such favourable arrangements with government. The market entrepreneur operates without special favours from the government.

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1.4 Entrepreneurship and IntrapreneurshipGiven below is the description of entrepreneurship and intrapreneurship

1.4.1 Entrepreneurship

An entrepreneurship is a process that involves various actions to be undertaken to establish an enterprise by an • entrepreneur. Entrepreneurship can also be said to be a tendency of mind to take calculated risks with confidence to achieve a predetermined business objective.

Entrepreneurship = Entrepreneur + Enterprise

Fig. 1.1 Schematic representation of entrepreneurship

Entrepreneurship is the active process of creating incremental wealth. Individuals, who assume the major risks • in terms of equity, time, and commitments or provide value for some product or services, create the wealth. Thus, we can define entrepreneurship as the process of creating something innovative with value by devoting the • necessary time and effort, assuming the accompanying financial, psychological, and social risks and receiving monetary and personal satisfaction and independence.This definition stresses on four aspects of entrepreneurship. They are as follows:•

Entrepreneurship involves the creation process–creating something new. �Entrepreneurship requires the devotion of the necessary time and effort. �Assuming the risks is an essential aspect of entrepreneurship. �The last part of the definition involves rewards of being an entrepreneur. These rewards are mostly in the �form of success in terms of personal satisfaction and money.

Management Thinkers Views

Schumpeter

“Entrepreneurship is essentially a creative activity. The entrepreneur is the innovator who introduces something new into the economy. Entrepreneurs are business leaders and not simple owners of capital. They have vision, drive and talent, and spot out opportunities and promptly seize them for exploitation.”

McClelland “Entrepreneurship means the function of creating something new, organising, coordinating, undertaking risk and handling economic uncertainty.”

A.H. Cole

“Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or organise a profit oriented business unit for the production or distribution of economic goods and services.”

Peter Drucker

“Entrepreneurship is neither a science nor an art. It is a practice and has a knowledge base. Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for different businesses or services.”

Table 1.1 Views of management thinkers on entrepreneurship

Entrepreneur Enterprise(Process Driver) (Actionable Process) (Expected Outcome)

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1.4.2 Intrapreneurship

Pinchot (1985) coined the term Intrapreneurship to describe entrepreneurial-like activities inside organisations • and government. The concept is commonly referred to as Corporate Entrepreneurship. Intrapreneurship is the practice of entrepreneurial skills and approaches by or within a company.Pinchot identified four stages of spontaneous team development. •

Stage 1Sole Phase

Stage 2Network Phase

Stage 3Bootleg Phase

Stage 4Formal Team Phase

Individual nurtures idea to establish feasible innovation to develop.

Innovator seeks advice and support from col-leagues to develop the idea.

Working informally team proposes idea to organisation for development.

Corporate provides budget and mandate for team to pursue formal development of motivation.

Fig. 1.2 Four stages of intrapreneurial team development

Individuals, who strongly believe in their own talents, have a regular desire to create something independently, • want responsibility and have a strong need for individual expression and more freedom in their present organisation, are ideal to be termed as intrapreneurs.Thus, an intrapreneur is a persistent leader with a unique vision who is able to bring about change from within • an institution or organisation, through innovation. These innovative employees help the company in constructive ways to initiate new products and services. The intrapreneur uses resources in creative ways, by recruiting a core team of motivated people and encouraging • them to implement change and innovation, by building bridges and bringing people together from within various parts of the institution.It is very essential for the senior management of the company to carefully utilise the skills of these intrapreneurs • to achieve organisational goals. For example: Wipro Technologies•

Wipro Technologies which is one of the India’s top 3 IT service companies initiated a unique program. �Wipro had a sizeable chunk of IT professionals who were not being assigned to client projects. Instead of resorting to layoffs, it invited employees to submit their business ideas in the technology domain, �which could be implemented within the broad areas of its operation. A committee of technology, business and finance professionals goes through all such proposals and �employees are asked to defend their ideas. All accepted proposals are started within the organisation by mutual decision.The employees are educated on the importance of Intellectual Property and encouraged to file patents with �joint ownership. This helped Wipro to increase the entrepreneurial spirit of employees as well as effectively utilise its vast pool of technical talent.

1.5 Entrepreneurial CultureCulture is a set of social behavioural aspects, which include mainly beliefs, knowledge, ideas and preferences. • According to Webster, “Culture is an integral pattern of human behaviour which includes thoughts, speech and action.”

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Entrepreneurial culture involves vision, values, norms and traits that are helpful for the development of • the economy. Culture of any enterprise depends on the culture of that country as well as the nature of that business.In order to create a culture which promotes growth, entrepreneurs should overcome their old established mindsets, • regulate themselves and build up their tolerance for the vague, the uncertain and the unpredictable. An entrepreneur should be prepared to face any type of risk. Thus, entrepreneurial success is a result of strategic • thinking and corporate culture building.

1.5.1 Elements of Entrepreneurial CultureThe entrepreneur has to ensure that the following elements are a part of the entrepreneurial culture of his enterprise:

people and empowerment focused• value creation through innovation and change• commitment and personal responsibility• attention to the basics• hands-on management• doing the right thing and freedom to grow and to fail• emphasis on the future and a sense of urgency•

1.5.2 The Building Blocks of Entrepreneurial Culture

V.V. Ranganathan, the Country Leader and National Director, Entrepreneur of The Year Awards, Ernst & Young • India stated that, “A robust entrepreneurial culture has strengthened India’s position in the world economy. As Indian businesses cross borders, they foster both wealth creation and generation of employment opportunities. • Given the right impetus, there is very strong potential for more Indian businesses to become truly world class players.”

The following are fundamentals that help build an entrepreneurial culture:

Organisation cultureOrganisational culture consists of the social structure, and integrated form of attitudes, values, experiences, • and beliefs. Organisational culture is the specific collection of values and norms that are shared by people and groups in an • organisation and these influence the way they interact with each other and with stakeholders of the company.

Corporate cultureCorporate culture brings the following things for an entrepreneur:

Leader - set examples in terms of personal characteristics like honesty and justice.• Facilitator- demonstrates commitment, communicate and listen to people.• Deliberate - be result oriented, use firm agendas and strive for specific objectives.• Decisive - take fast decisions, be quick and transparent.• Explicit - get people to take responsibility for small as well as big tasks.•

Quality cultureQuality culture means total quality output and customer satisfaction. It also means improvement of quality of work life and employee satisfaction. It is the sum total of norms, beliefs and values that regulate the behaviour of individuals and groups within an organisation.

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Productivity cultureProduct improvement does not only mean doing things better but doing the right things better at the first time itself. The attitude of the employees working in the organisation influences the productivity culture.

Business ethics/code of conductBusiness ethics is a normative discipline, whereby particular ethical standards are advocated and then applied. It makes specific judgments about what is right or wrong. In other words, it makes claims about what ought to be done or what ought not to be done in the course of business.

1.6 Comparison of Traditional Manager, Intrapreneurs and Entrepreneurs

Attribute Traditional Manager Intrapreneur Entrepreneur

Primary mo-tives

Office, power, promo-tions and other corporate rewards

Freedom, access to corporate resources, goal oriented, self-motivated

Independence, op-portunity to create, money

Time orienta-tion

Short- term meeting quotas, budgets- weekly, monthly, quarterly and an-nually

Depending on urgen-cy to meet self-im-posed and corporate timetable

Survival and achiev-ing business growth in 5-10 years

Status Concerned about status symbols

Desires independ-ence, cares less about status

No concern about status symbols

ActivityDelegates and supervises more than direct involve-ment

More than delega-tion, direct involve-ment

Direct involvement

Risk failure and mistakes

Cautious Avoids mistakes and failures

Moderate risk taker Attempt to hide risky projects from view until ready

Moderate risk taker Deals with mistakes and failures

Decisions Aligned with senior man-agement decisions

Ability to get others agree to help achieve dream

Follows own dreams

Relationship with others

Hierarchy as the basis of relationship

Transactions within hierarchy

Transactions and deal making as basic relationships

Family history Family members worked for large organisation

Entrepreneurial, small-business or farming background

Entrepreneurial with small-business, pro-fessional or agricul-tural background

Table 1.2 Comparison of traditional managers, intrapreneurs and entrepreneurs

1.7 Role of Entrepreneurship in India The Indian economy has transformed consistently from a backward agrarian economy to its present status. Small • business has played a crucial role in this transformation of the Indian economy. It has created millions of job opportunities to the unemployed people even to those having basic education. It • has fostered the inbuilt entrepreneurial spirit in all the corners of the nation which has developed all the regions. It has been instrumental in raising the standard of living of the massive population.

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The small-scale sector has contributed specifically in the following areas:• employment generation �low initial capital investment �balanced regional development �equitable distribution of income �promoting inter-sectoral linkages �exporting goods �development of entrepreneurship �

Many of the big businesses today, for example, Siemens, Ford, Reliance, Eastman Kodak, Lever Brothers, • Nirma, Rasna and so on, were all started as a small business and then raised into big businesses. The success stories of businesses built on a great idea executed by a talented team have great appeal in India, in spite of scarcity of capital and resources. Entrepreneurship has been embedded in the Indian genius and is a part of its tradition. The renowned economist • T.N. Srinivasan states that, “India has been an entrepreneurial society and the entrepreneurial spirit is an ongoing characteristic of India’s history. Traditionally, the Entrepreneurship of trading communities is facilitated principally by the successful use of informal entrepreneurial ecosystems and interdependent business networks.”Government must commit to create the right environment to develop successful business builders. To do this, • the government must focus on four areas like:

creation of conducive environment to start a business �ensure that entrepreneurs have access to the right skills �ensure that entrepreneurs have access to smart capital �enable networking and exchange of ideas �

Thus, India can benefit by creating a strong forum of entrepreneurs from whom new entrepreneurs can draw advice and support.

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SummaryThe Merriam- Webster Dictionary defines the term entrepreneurs “the one who organizes, manages and assumes • the risks of a business or an enterprise”. The term entrepreneur is derived from the French verb ‘enterprendre’, which literally means to undertake something. An entrepreneurship is a process that involves various actions to be undertaken to establish an enterprise by an • entrepreneur. Entrepreneurship can also be said to be a tendency of mind to take calculated risks with confidence to achieve a predetermined business objective.Whereas, individuals who strongly believe in their own talents, have a regular desire to create something • independently, want responsibility and have a strong need for individual expression and more freedom in their present organisation, are ideal to be termed as intrapreneurs.Pinchot (1985) coined the term Intrapreneurship to describe entrepreneurial-like activities inside organisations • and government. The concept is commonly referred to as Corporate Entrepreneurship. Intrapreneurship is the practice of entrepreneurial skills and approaches by or within a company.The intrapreneurial team development passes through phases like sole phase, network phase, bootleg phase, • formal team phase.The basics of entrepreneurial culture along with the elements of the entrepreneurial culture are included in this • chapter. The building blocks of culture are organisation culture, corporate culture, quality, productivity, and business ethics.The comparison between an entrepreneur, a manager and an intrapreneur is done considering the attributes like • primary motives, time orientation, status, activity, risk failure and mistakes, decisions, relationship with others, family history.The chapter concludes with the brief description of entrepreneurship in India and what needs to be done to • boost the new entrepreneurs of our country. It has emphasized on the role of Indian Government to create right environment to develop successful entrepreneurs.

ReferencesGoswami A., Dalmia, N., Pradhan, M., 2008. • Entrepreneurship in India. National Knowledge Commission.Nieuwenhuizen C., Machado R., 2004. • Basics of Entrepreneurship. Juta and Company Ltd.Chatrapathy, M. M., 2007. • Basics of Business and Entrepreneurship. Asian Centre for Entrepreneurial Initiatives.

Recommended ReadingBhide, A., 2004. • What Role for Entrepreneurship in India? Columbia University.Lal, A. K., R. W., 2005. Economic Development in India : The Role of Individual Enterprise. • Asia- Pacific Development Journal, Vol. 12, No. 2.Singh, B., 2009. • Entrepreneurship Development. Wisdom Publications.

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Chapter II

Entrepreneurial Development Process

Aim

The aim of this chapter is to:

illustrate various types of enterprises•

state the problems in small scale enterprises•

highlight entrepreneurial development process and its phases•

enlist characteristics of successful entrepreneurs•

Objectives

The objectives of this chapter are to:

understand the entrepreneurial process •

identify the factors that affect entrepreneurs decisions•

explore the characteristics of successful entrepreneurs•

understand the corporate development process model•

Learning outcome

At the end of this chapter, the students will be able to:

understand entrepreneurial development process and its phases•

identify the types of environment affecting entrepreneurs decisions•

recognise the key success factors of entrepreneurs•

enlist problems of small scale enterprise•

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2.1 IntroductionEntrepreneurs are those who like to set up a business on their own. The business ideas can evolve out of many sources like experience, friends and relatives or personal interests. The process of creating or grabbing an opportunity is quit difficult for most of the entrepreneurs. However, to start up with any type of business it is necessary to understand the opportunities available in that particular business. Once the entrepreneurs are aware of the opportunities which will be advantageous to set up a business, they advance to carry out set of actions to set up the business. This process is called as entrepreneurial process.

2.2 The Entrepreneurial EnvironmentThe factors that affect entrepreneurs are referred to as the entrepreneurial environment. The entrepreneurial environment is classified into six parts as shown.

Fig. 2.1 Entrepreneurial environment

Entrepreneurial development is largely dependent on the types of environments and hence they are major considerations in the decision-making process of entrepreneurship. Following table gives a view of type of environment and what it consists of:

Type of Environment CompositionPolitical Environment Political conditions, leadership qualities, and so on

Economic Environment Economic policies, trade practices, tariff regulations, incentives, subsidies, labour issues, and so on

Social Environment Consumer attitudes, tastes, and motives

Technological Environment New inventions, risk management, productivity, compe-tition, and efficiency

Legal Environment Rules and regulations, Government guidelines

Cultural Environment Social structure, values, beliefs, aspirations, and so on.

Table 2.1 Types of environments

Economic Technological

Legal

SocialPolitical

Cultural Entrepreneurial Environment

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2.3 Entrepreneurial DecisionsThe entrepreneurial process involves the selection or formation of a combination of resources, stakeholders and an environment that transforms the idea into a successful enterprise. This selection and formation occurs through a set of interconnected entrepreneurial decisions. Entrepreneurial decisions arise out of four interconnected decision domains. They are as follows:

ResourcesThis domain includes non-human resources. The decisions raised out of this domain typically lead to the selection/• creation of a production function with relevant inputs and technological constraints.Financing issues, issues of information systems and flows including accounting can also occur in this • domain.

StakeholdersThis domain involves all stakeholders internal to the firm except the entrepreneur. • Decisions arising out of this domain typically lead to the selection/creation of a set of feasible contracts between • stakeholders within the firm.

EnvironmentThis domain forms the interface between the firm and its external environment. The external environment • consists of competitive (market/strategic) environment and macroeconomic environment. The decisions raised out of this domain lead to the development of the firm’s core competencies.• The other areas included in this domain are issues of market identification, positioning, and strategy • development.

EntrepreneurThis domain is particularly unique to the pre-firm and brings in issues of leadership, vision and the subjective • theories of the entrepreneur who makes the selection/creation decisions arising out of all the domains. Decisions arising out of this domain lead to the overall identity of the firm in terms of its organisational structure, • form, and purpose. In other words, they lead to either the creation of the firm or the premature termination of the pre-firm.

Fig. 2.2 Entrepreneurial decisions arising out of four interconnected decision domains

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The figure illustrates a set of entrepreneurial decisions arising out of the four interconnected decision domains. The topological objects are used to capture the interconnectedness of the four domains. However, there are many factors that affect the entrepreneur’s decision like:

culture and sub-culture• education and experience• peer groups• family background•

2.4 Types of Enterprises Sole proprietorship

This type of enterprise is easy to form as it usually involves just one individual who owns and operates the • enterprise. Example: Haldiram took 20 years to grow and venture abroad.Advantages• : All income belongs to the owner. From legal point of view, it is easy to start and close down a sole proprietorship. The functioning of the enterprise is simple and can be easily adapted to changing circumstances.Disadvantages• : Raising capital is difficult as banks and other financing sources are often reluctant to make business loans to sole proprietorships.

PartnershipIn this case business will be owned and operated by several individuals. There are minimum of two partners • and maximum of twenty members. Partnerships come in two varieties: general partnerships and limited partnerships. Advantages• : Opportunities for obtaining capital are usually favourable. The decision making process is faster. The partners are taxed in their personal capacity and not collectively, so the profit is shared and each partner’s share is taxed separately. Disadvantages• : Personal liability is a major concern. Like sole proprietors, general partners are personally liable for the partnership’s obligations and debts.

CorporationA corporation is an independent legal entity, separate from its owners, and as such; it requires compliance with • more regulations and tax requirements.Advantages• : A corporation’s debt isn’t considered that of its owners, so personal assets are not put at risk. A corporation can also retain some of its profits without the owner paying taxes on them. Other advantage is the ability of a corporation to raise money. A corporation can sell stock, either common or preferred to raise funds.Disadvantages• : There are higher costs involved. Corporations are formed under the laws of each state, each of which has its own set of regulations. You’ll probably need the assistance of an attorney and accountant to guide you. And not only are corporations subject to corporate income taxes at both the federal and state levels, any earnings distributed to shareholders in the form of dividends are taxed at individual tax rates on the owners’ personal income tax returns.

2.5 Problems in Small Scale EnterpriseDuring the process of setting up an enterprise, the entrepreneurs face many problems. The problems in small scale enterprise are as follows:

Problem of raw materialA major problem that the small scale enterprises face is with the procurement of raw materials. The problems • related to raw materials include:

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an absolute scarcity �poor quality of raw materials �inadequate suppliers �

The small units that use imported raw material face raw material problem with more severity, mainly due to • difficulty in obtaining this material either on account of the foreign exchanges crisis or some other reasons.

ProblemoffinanceAn important problem faced by the small-scale industries in the country is that of finance. The problem of • finance in small-scale sector is mainly due to two reasons

scarcity of capital in the country as a whole �weak credit worthiness in the country �

High custom duties and high taxes, delayed payments from customers add up to the financial problems of the • entrepreneurs.

Marketing problemsThe small entrepreneur cannot supply standardised goods of high quality and as a result cannot compete with • products of large companies or MNCs. They usually do not have a brand name or loyalty, as there are hardly any funds for advertising or sales • promotion.

Under-utilisation of capacityAccording to Arun Ghosh, on the basis of All India Census of Small Scale Industries 1972, the percentage • utilisation of capacity was only 47 in mechanical, 58 in automobile industries, 50 in electrical, 55 in leather products and only 29 in plastic products manufacturing. On an average, it concludes that 50 to 40 percent of capacity was not utilised in small-scale units. The vital problem of under-utilisation of capacity is power problem faced by small-scale industries. The power • supply is not always available to the small scale units, and if it is available it is rationed by utilising only for few hours. Since small scale units are weak on economic front, they have to manage the best as they can within the available • meagre means.

Obsolete technologyMost small businesses use old technologies because they cannot afford better. As a result, the quality of their • goods is inferior and the cost of production is higher than in the case of other large-scale enterprise. This has adverse effects especially after opening up of the economy when they have had to compete with • imported goods.

Poor project planningWith the lack of education and experience, small-scale businessmen often depend upon consultants. • They do not fully understand project details. Due to poor planning of project, cost and time overruns arise.•

Inadequate infrastructureInfrastructure quality and quantity of transportation, communications and other basic services particularly in • backward areas is another problem. Inadequate infrastructure results in underutilisation of capacity and wastages. For example, instability of voltage, • unscheduled power cuts and long delays in getting power connections are common.

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Poor managerial and organisational skillsUsually the entrepreneur has to perform diverse functions invariably without having any exposure to professional • education or formal training. On the other hand, the large -scale enterprise hire the best-qualified and trained people. This may lead to hiring • more people than required and improper selection. This will add up to the costs. Also the entrepreneur may not be able to see the company as a whole. This inability to see the bigger picture is • a typical managerial failure observed in entrepreneurs.

Other problemsIn audition to the problems listed above, there are numerous other problems that the small units face. • According to the Seventh Five Year Plan, these include shortage of trained technicians, technological obsolescence, • insufficient management expertise, unorganised nature of operations, and so on.

2.6 The Entrepreneurial ProcessThe process of starting a new enterprise is embodied in the entrepreneurial process, in which entrepreneurs • play a significant role. It does not only involve problem solving in a typical management position, but an entrepreneur must find, evaluate, • and develop an opportunity by overcoming the factors or risks that affect the creation of a new enterprise.The process has four distinct phases:

identification and evaluation of the opportunity �development of the business plan �identification of resources �management of the enterprise �

Fig. 2.3 The entrepreneurial process

IdentificationandevaluationoftheopportunityOpportunity identification and evaluation is a very difficult task. Most good business opportunities do not suddenly • appear, but rather result from an entrepreneur’s alertness to possibilities, or in some cases, the establishment of mechanisms that identify potential opportunities. The entry of the entrepreneurs into the business world is with the intention to earn profit.Entrepreneurship is a profit-oriented activity. Thus, entrepreneurial opportunity is evaluated by two distinct • attributes:

Identify Opportunity

Entrepreneur

Analyse outcomes

Develop Business Plan

Determine Resources

Manage the Enterprise

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Market issues: potential, profit margins, competitors, barriers to entry �Financial issues: taxation, capital required, returns on investment �

These two attributes decide the possibility and profitability of converting the opportunity into a concrete business • project. Opportunity analysis or opportunity assessment plan includes:

description of the product or service �assessment of opportunities, entrepreneur and the team �specifications of all the activities and resources needed to translate the opportunity into a feasible business �venturesource of capital to finance the initial venture as well as its growth �

The assessment of the opportunity requires answering the following questions:• What does market need? �What personal observations have been experienced or recorded with regard to that market need? �What social condition underlies this market need? �What market research data can be organised to describe this market need? �What competition exists in this market? How would one describe the behaviour of this competition? �What does the international market look like? �What does the international competition look like? �Where is the money to be made in this activity? �

Development of the business planA good business plan must be developed in order to develop the defined opportunity. This is a very time-• consuming phase of the entrepreneurial process. An entrepreneur usually has not prepared a business plan before and does not have the resources available to • do a good job. A good business plan involves:

development of the opportunity �identifying the resources �obtaining those resources �successfully managing the enterprise �

IdentificationofresourcesThe resources needed by a typical enterprise are:

people �premises �customers �suppliers �funds �

Any resources that are critical need to be differentiated from those that are just helpful. Care must be taken not • to underestimate the amount of variety of resources needed. Acquiring needed resources in a timely manner, while giving up as little control as possible is the next step in the entrepreneurial process. The risks involved in obtaining resources should also be determined. The amount of resources may vary as per • the stages of growth of the enterprise. For example, as the business develops, more funds will probably be needed to finance the growth of the enterprise, • requiring more ownership to be relinquished. That is why, alternative suppliers of all the resources, along with their needs and desires need to be identified.

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Management of the enterpriseAfter resources are acquired, the entrepreneur must use them effectively to execute the business plan. This involves following steps:

Planningdecision making • operational and strategic planning• budgets and cash-flows•

Organisingdivision of work and organisational structure• allocating available resources•

Leadingdelegation • motivation•

Controllingperformance evaluation• review•

The operational problems of the growing enterprise must also be examined. This involves implementing a management style and structure, as well as determining the key variables for success. A control system must be established, so that any problem areas can be quickly identified and resolved.

Thus, we have studied the basics of entrepreneurial. However, various thinkers in this field have proposed different models for entrepreneurial process or new enterprise creation, which are discussed hereunder.

2.7 Entrepreneurial Process ModelsDescribed below are the entrepreneurial process models.

2.7.1 The Four Stage Growth Model The four-stage growth model consists of categories of distinct activities that are essential for the progress of new enterprise from an idea to a substantial enterprise. The four stages are as follows:

Pre-start-up stage1. Start-up, early stage2. Early growth stage3. Later growth stage4.

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Fig. 2.4 The four-stage growth model

Pre-start up stagedefining business concept• product-market study• financial planning• pre-start-up implementation•

Start-up stageThis is the initial period of the business and does not have a definite timeframe nor are there models to describe • what a business does during this stage; however there are two standard conditions. First, entrepreneurs want to meet operating objectives, such as satisfying sales, revenue and cost targets.• Second, they want to position the venture for long term growth.•

Early growth stageThis is a period of intense monitoring and growth can occur at different rates.• The growth rate ranges from slow growth through incrementally higher sales to explosive growth through • quantum changes in consumer demand.

Later growth stageIf the enterprise proves successful in the early growth stage, it can find itself in competition with larger • companies.This is the later growth stage, when the rate of growth may be slower and the industry has attracted • competition.Companies reaching this stage, often “go public” with stock offerings. Family fortunes turn into corporate equity • positions and professional management replaces the entrepreneurial cadre.

2.7.2 The Corporate Development Process Model

The process of development of the firm in interaction with its institutional environment is discussed below with • the help of the figure.

Pre-start-up stage Start-up stage Early growth stage

Later growth stage

The period during which enterprise is planned and preliminary work of obtaining resources and getting organised prior to start up

The initial period of business when entrepreneur must position the enterprise in market and necessary adjustments to sure survival

This is the period of rapid growth. Enterprise may undergo major changes in market, finance and resource utilisation.

Enterprise evolves into a large company with active competition in established industry. Professional Management is more important than entrepreneurial energy.

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Fig. 2.5 The corporate development process model

The figure illustrates the interaction between the individual entrepreneur/entrepreneurship and informal/cultural • and structural/formal institutions, i.e., the corporate development process. This model is divided into three stages:

the initiation phase �the establishment phase �the operational/growth phase �

The model also illustrates how companies are affected in the development process by informal and formal • institutions, respectively, in three development phases. In general, the entrepreneurial perspective can be divided into two:

focussing on the individual (the entrepreneur in focus) �focussing on the corporate development process, i.e., the entrepreneurial process �

Entrepreneurship is viewed as a process where companies develop interaction with the institutional environment. • This involves the role that institutions play in the corporate development process.

2.8 Key Success Factors for EntrepreneursEntrepreneurs possess unique characteristics that set them apart from people who are intent on starting an • enterprise on their own. However, different entrepreneurs possess different characteristics. Some of them become successful because they are prepared to take risks, and others achieve their goals as a • result of their innovative ideas, skills and flair for management.

Regulative or

Formal Institutions

Regulative or

Formal Institutions

Regulative or

Formal Institutions

Cognitive-cultural or

informal Institutions

Cognitive-cultural or

informal Institutions

Cognitive-cultural or

informal Institutions

Initiations phase(Entrepreneur)

Establishment phase(Enterprise)

Growth phase(Enterprise)

Phase 1The initiation

phase

Phase 1The establishment

phase

Phase 1The operational/

growth phase

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Fig. 2.6 Key success factors for entrepreneurs

Factors that usually contribute to successful entrepreneurship are known as key success factors, which are summarised in the figure given above. Other key successful factors are as follows:

Entrepreneurial team• : The foremost key success factor is the “entrepreneurial team”. The team is important, because, usually, entrepreneurs do not start businesses by themselves, and they have teams, partners, close associates, or extensive networks of advisers.Products or services• : Nearly all successful enterprises start from small scale and grow incrementally. There are very few which start on a large scale at the beginning. Products tend to have strong profit potential with high initial margins rather than small margins with substantial volume requirement. Service businesses hold good margins by effective cost controls and well-monitored overheads.Markets and timing• : Successful entrepreneurs usually have a clear idea of both existing and potential customers. All great ideas need to be carried out simultaneously with valid market research. Timing pertains to when products or services are introduced, how they are introduced, how they are priced, how they are distributed, and how they are promoted.Business ideology• : A business ideology is defined as a system of beliefs about how one accomplishes an enterprise. From an entrepreneur’s perspective, every enterprise has an ideology, a philosophy or rationale for existing.

2.9 Characteristics of Successful EntrepreneursIf we go through the business history of India, we come across the names of persons who have emerged as • successful entrepreneurs. Some examples of successful entrepreneurs are JRD Tata, Dhirubhai Ambani, Aditya Birla, Rahul Bajaj, Laxmi Niwas Mittal, Azim Premji and many more. Thus, it is seen that the success of these entrepreneurs was because of their unique characteristics. The • characteristics that are seen in most of the successful entrepreneurs are:

self-confidence and optimism �able to take calculated risk �positive responce to challenges �creativity, high achievement motivation �dynamic leadership �flexibility �market knowledge �team spirit �resourcefulness �independent mindset �foresightedness �responsive to suggestions �

KEY SUCCESS FACTORS

Skill ExpertiseAptitude

Personalqualities

Managementskills

Externalfactors

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initiative taker �open to criticism �

2.10 Functions of EntrepreneursKilby identified many functions of an entrepreneur, in which managerial functions are also included. He has classified these functions into four groups as follows:

Exchange relationshipperceiving market opportunities• gaining command over scarce resources• purchasing inputs• marketing of the products and responding to competition•

Political administrationdealing with public bureaucracy• managing human relation within the firm• managing customer and supplier relations•

Management controlmanaging finance • production management•

Technologyacquiring and overseeing assembly of the factory• upgrading process and product quality• introducing new production techniques and products•

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SummaryThe entrepreneurial process has two main models: the four stage growth model and the corporate development • process model. The basic entrepreneurial process has four distinct phases including; identification and evaluation of the • opportunity; development of the business plan; determination of the required resources and; management of the resulting enterprise.Entrepreneurial development is largely dependent on the types of environments and hence they are major • considerations in the decision-making process of entrepreneurship. There are six types of environments like political, economic, social, technological, legal, and cultural environment.The types of enterprises have also been described in the chapter. There are mainly three types of enterprise; • sole proprietorship, partnership and corporation.The in-born traits in an entrepreneur and the skill sets which can be developed to be successful in this field • are an integral part of the successful entrepreneurial process. The focus should be on developing creative entrepreneurs by stimulating innovation and the entrepreneurial spirit. This will help our country to become a strong and growing economy in the 21st century.Successful enterprises can be achieved by studying the key success factors, functions and the characteristics • present in the successful entrepreneurs. Characteristics like self-confidence, optimism, taking calculated risk, responding positively to a challenge, creativity, high achievement motivation, dynamic leadership and flexibility should be present in a person who wishes to become a successful entrepreneur.

ReferencesSingh, B., 2009. • Entrepreneurship Development. Wisdom Publications, Delhi.Cecile, N., Machado R., 2004. • Basics of Entrepreneurship. Juta and Company Ltd. P12– 14, P38 –40.Chatrapathy, M. M., 2007 • Basics of Business and Entrepreneurship. Asian Centre for Entrepreneurial Initiatives.

Recommended ReadingCentre for Business Planning• . Available at: <http://www.businessplans.org>. Accessed 30th November 2010.Lal, A. K., Clement R. W., 2005. Economic Development in India: The Role of Individual Enterprise, • Asia-Pacific Development Journal, Vol. 12, No. 2.

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Chapter III

The Business Planning Process

Aim

The aim of this chapter is to:

explain the concept of business plan•

study how to generate business ideas •

look into entrepreneurship development cycle•

examine the problems and opportunities for entrepreneurs•

Objectives

The objectives of this chapter are to:

determine the business planning process•

understand elements of a business plan•

analyse the environment and the process of environmental scanning•

examine the different factors in entrepreneurial cycle•

Learning outcome

At the end of this chapter, the students will be able to:

state the business planning process•

understand the effects of environmental factors on business planning•

recog• nise the business incubators

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3.1 IntroductionA business plan describes a business opportunity. It is like a road map, because it tells what to expect and what alternative routes are available to arrive at determined destination. A number of research studies have indicated that successful small business managers set realistic goals and plan how they are going to achieve them.

Planning facilitates the entrepreneurs to work smarter rather than harder. It facilitates future-orientation and motivation to achieve the results. Perhaps, most importantly, the process of completing a business plan helps in analysing the goals of business and work with commitment to make a successful enterprise. Roger Thompson in Nation’s Business says that, “A realistic business plan might save you from yourself by persuading you to abandon a bad idea while your mistakes are still on paper.”

3.2 Principles for Business PlanningBefore getting into the details of preparing a business plan, Jack Kaplan of the Columbia Business School, suggests that it is necessary to answer the couple of questions such as:

What is the idea to set up a business?• What is the purpose of this plan?• Who is the target audience?• How can the plan help to advance the project?• What are the current market needs?• What is the target set to achieve the market goals? •

A plan must be:explicit: all steps must be completely spelled out• intelligible: should be capable of being understood by those who will carry it out• flexible: should be able of accepting change• written: committed to writing in a clear and concise manner• presented with the distribution plan: must be specific about how the company will sell and distribute its products • or services

3.3 Common Elements in a Business PlanExecutive summaryThis is the first section of a business plan and is a synopsis of the proposed enterprise. Usually, it has no longer than three pages and addresses five subjects as mentioned below:

definition of the enterprise• products or services• market characteristics• entrepreneurial team• financial summary•

Business conceptA brief description of the business is done in this section. Points which could be included in this section are:

purpose of enterprise and major objectives• description of major competencies of the firm• nature of market demand• nature of business• technological profile of the firm•

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Product or serviceThis section includes detailed description of the firms proposed product/service. The major points that are present are as follows:

nature and function of product and service• proprietary interests• attributes and technical profile•

Market research and analysisThis may be the most difficult but the most essential part of the proposed plan. This may include:

proposed customer profile and consumer behaviour research• macro-environment, market scenario, trends• competitor profile• market niche and pricing systems• distribution channels• sales forecast•

Market planThis plan describes the entrepreneur’s intended strategy. It is built on the research findings. This section usually describes the following marketing aspects such as:

product or service• prices• promotions• distribution channels• services and warranties• market leadership•

Manufacturing or operationsThis section depends on the nature of business. The key elements of a typical operations plan are as follows:

facilities - size, layout, capacity, location• inventory - raw material inventory, finished goods inventory, warehouse requirements• human resource requirements• operational rationale• insurance and legal protection•

Entrepreneurial teamprofile of founders• key personnel• investors• key management roles•

Financial documentationincome and expenses statements• cash flows• assets and liabilities•

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3.4DefiningaBusinessIdeaGreat ideas cultivate great business opportunities. The definition of a successful business is one, which is • profitable, and profitable business is built upon ideas that have been thought, researched and evaluated. Once an idea is thought to represent a real opportunity, one must be able to research the market, know what data • is important and how to gather it meaningfully, and know what actions this information indicates. This can then be worked into a rather detailed plan, and then advanced into a blueprint for success.

Below are some steps an entrepreneur can carry out to transform the idea generated into a successful dream enterprise.

Analyse likesA list of personal interests and hobbies, something one is good at should be prepared. Others opinions can also • be sought. This list represents broad business models, which will give you the greatest joy over time. Decide which items on your list you would most like to develop into a business.•

Generation of ideasIdeas can be generated from many sources. Some of the sources are as follows:

family • friends• successful entrepreneurs• from skills, attitudes and aptitude• from daily activities•

DefinethebusinessoperationsTo define the business operations, following questions must be answered:

What are the skills and experience related to this business?• What are the estimated fixed costs and other variable expenses?• What is estimated the break-even period?• What is the statutory compliance needed?• What are the proposed sources of finance?• Are there any insurance and legal coverage requirements?• What will be the corporate structure of the business?•

3.5 Identifying Problems and OpportunitiesTo identify the potential opportunities and problems, the entrepreneur has to follow the following steps:

OpportunitycreationoridentificationAn entrepreneur may identify a potential opportunity by various ways. One could be by observation of the environment. Some of the other methods adopted by potential entrepreneurs are as follows:

identification of the needs of the people• market survey• trade, journal, business magazines and newspapers• technical and vocational skills• education• monopoly business• government schemes•

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Strength weakness analysis of the particular opportunityThis is the most critical step after identifying the opportunity. It involves ascertaining business value of the idea by assessing the questions such as:

How would the market accept the product/idea? • What resources would be required? • What are the entry and exit barriers?• What is the extent of present/future competition? • What is the expected revenue generation and market size?•

Risk return analysisThe evaluation of risks and returns can be calculated by using various methods like SWOT analysis and ETOP. These indicate the different factors which are available in the form of opportunities or threats, and thus lead to risks or returns. Some of the questions to be considered to quantify the risk factor are:

How would the lack or shortage of the resources affect? • Is there the risk of obsolescence or what is the shelf life of the product? • What if the committed factors or resources are not consistent with time? •

Mapping of entrepreneur’s skills and competence against the opportunityHere, a comparison between the entrepreneur’s capability to manage the business and the risk of investing into that particular business is made. One has to check the extent of risk involved in the business idea, how good are the returns on investment and how capable is the entrepreneur to cope with the unexpected situation and do the crisis management, if any. Conclusion can be contingency plan prepared by the entrepreneur and action plan for risk mitigation.

Study of competitors and environment factorsA detailed study of competitor profile is a must, as this will assist an entrepreneur to identify where he/she stands and where he/she has to be. The study of all the environmental factors as seen above can bridge the gap between entrepreneur and the opportunity.

Develop the opportunity into a business planWhen the entrepreneur is clear with the business plan, he/she can now be well equipped to face the real situation and proceed with the business idea.

3.6 Purpose of Business PlanPurpose of planningFollowing could be the purposes behind planning:

it acts as a long-term management tool• decisions can be made in the future that best fit with the aim of the business• to investigate and evaluate new business opportunities• to present a case for finance• to get a clear picture of the business and its potential• many of the areas covered in a business plan are common to all of the above purposes, the amount and type of • information will, however, vary with the purpose of the plan

Need of Planning Planning is essential to:

control future risks• prepare for future uncertainty•

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control business environment• control business growth• avoid sales crises• avoid liquidity crises• avoid succession crises• ensure people development• ensure work space available• avoid stock buying crises•

3.7 Environmental AnalysisEnvironmental analysis consists of following aspects

3.7.1 Environment Search

We have studied that market research is an important part of any business planning process. A detailed study of • the macro-environment is included in this research. The macro environment has two major parts: the internal and the external environment, which play a major role in any business development activity. Internal factors are those, which are controllable up to a certain extent. On the other hand, external factors are • those, which are uncontrollable but can affect the business tremendously.External factors include the demographic environment, natural environment, technological environment, political • environment and socio-cultural environment. It is necessary o study the environmental factors before starting any enterprise.

Fig. 3.1 Environmental circle

(Source: Johan Strydon, Alex Antonites, Andreas de Beer - Entrepreneurship & how to Establish Your Own Business)

3.7.2 Types of EnvironmentFollowing are the types of environment:

Macro environment

Market environment

Micro environment

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Demographic environmentThe most important factor that entrepreneurs monitor is Demographic environment i.e. size and growth rate of • population in cities, age distribution, ethnic mix, educational levels, household patterns, and so on. Entrepreneurs have to find out the opportunities after analysing the purchasing power of the population in that • area.

Natural environmentEntrepreneurs need to be aware of the threats and opportunities associated with the natural environment like • the shortage of raw material especially water, increased cost of energy, increased pollution, non-renewable resources, and so on.

Economic environmentA business depends upon the purchasing power of people and the purchasing power depends upon people’s • income, savings, and debt and credit availability. Major trends in income and consumer spending patterns are to be studied. Entrepreneurs, for their convenience, can distinguish market in to five different income distribution patterns as • very low income, low income, medium income, high income and very high income.

Technological environmentAn economy’s growth rate is affected by how many major new technologies are discovered. Thus, entrepreneurs • have to keep pace with what new technologies are emerging in the market, where is a scope for innovation, etc. One needs to keep on upgrading on the technological front to stay in business. Emerging technologies can also • give birth to new business ideas.

Socio-cultural environmentEntrepreneurs need to study people’s views, values, beliefs, attitudes and culture in that area before starting • any business. The product/service should correspond to society’s core values and address the needs of different cultures in • the society.

Political-legal environmentEntrepreneur’s decisions are strongly influenced by developments in the political and legal environment. This • environment is composed by government rules, laws, regulations, government agencies, etc. Sometimes these rules create new business opportunities. For example, the Indian Government provides incentives • to entrepreneurs to promote industries in under-developed areas. Thus, entrepreneurs should have a good working knowledge of the laws protecting competition, consumer and • society.

3.7.3 Environmental Scanning

The process of environmental scanning refers to information gathering about the external environment, the • knowledge of which would assist entrepreneurs in shaping up their business plans. This study also helps an entrepreneur to know perceived environmental change and may lead to a strategic • change. It is the process by which organisations monitor their relevant environment to identify opportunities and threats affecting their business. The purpose of environmental scanning is to serve as an early warning system by alerting entrepreneurs to • potentially significant external developments in their early stages.

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Fig. 3.2 Environmental scanning process

3.8 Entrepreneurship Development CycleThe entrepreneurial development cycle begins with the individual entrepreneur who can decide to take advantage • of new innovations and translate them into a successful economic enterprise. The entrepreneur requires a lot of information and technological knowhow for translating a business idea into • a business plan and then into a setting up a business and in that context several simulatory, supporting and sustaining factors which compile the development cycle.

Fig. 3.3 Entrepreneurial development cycle

Stimulatory Factors Support Factors Sustaining FactorsEntrepreneurial education Registration of unit Helps in modernisation

Planned publicity for entrepreneur-ial opportunity Arranging finances Helps in diversification/expansion/

substitute production

Identification of potential entrepre-neurs through scientific methods

Providing land, shed, power, water and so on

Additional financing for full capacity utilisation

Help and guidance in selecting products and preparing project reports

Supply for scarce raw material and information

Diagnostic industrial extension/con-sultancy source

Scanning Strategies

ExternalEnvironment

Scanning

PerceivedChange

Change in Business Strategy

Internal Factors

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Evolving new products and pro-cesses, which are locally suitable Getting licenses Product reservation/ creating new

avenues for marketing

Availability of Counselling and promoting activity for entrepreneurs bytrained personnel

Providing common facilities Production unit’s legislation/ policy change

Availability of techno economic information and product profits

Offering management consul-tancy and help for marketing the product

Deferring repayment/ interest

Creating an entrepreneurial forum and recognition of entrepreneurial skills

Tax relief and other govern-ment subsidies

Quality testing and improving ser-vices

Table 3.1 Factors in the development cycle

3.9 Business IncubatorsBusiness incubators are organisations that support the entrepreneurial process, helping to increase survival rates • for innovative start up companies. Only entrepreneurs with feasible business ideas are admitted into the incubators, where they are offered a • specialised menu of support resources and services.

The resources and services provided to an entrepreneur include:provision of physical space �management coaching �help in making an effective �business plan, administrative services � technical support �business networking �advice on intellectual property �sources of financing �

The incubation process is intended to last around 2–5 years. Since business incubators are powerful economic • development tools, they collaborate actively with regional and national government agencies, from which they often receive financial grants. In many countries, business incubators have national associations to represent their interests and organise • meetings where best practices are disseminated.Evaluation of business incubators in Europe and the US suggest that 90% of incubated start-ups were active • and growing after three years of operation, which is a much higher success rate than that observed in start ups launched without assistance.Science-based business incubators are thought to be particularly useful from a policy perspective because they • can simultaneously promote knowledge diffusion, technology transfer and high-tech firm creation.

Thus, we have studied the business planning process in detail and how it helps the entrepreneurs to transform their idea into a successful business

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SummaryThe first step in setting up any enterprise is business idea generation. The effort required to implement the idea • into reality needs proper planning and its execution. Roger Thompson, in Nation’s Business, says that, “• A realistic business plan might save you from yourself by persuading you to abandon a bad idea while your mistakes are still on paper.” The eight elements of business plan include executive summary, business concept, product or service, market • research and analysts, market plan, operations, entrepreneurial team, and financial information. The entrepreneurs need to creator identify the opportunity, analyse strength and weaknesses, analyse risk in the • opportunity, study the market and develop opportunity into a business plan.The types of environment include micro and macro environment. The macro-environment further includes • internal and external factors. External factors include the demographic environment, natural environment, technological environment, political environment and socio-cultural environment.

The entrepreneur requires a lot of information and technological knowhow for translating a business idea �into a business plan and then into a setting up a business and in that context several simulatory, supporting and sustaining factors which compile the development cycle.Business incubators are organisations that support the entrepreneurial process, helping to increase survival �rates for innovative start up companies. Only entrepreneurs with feasible business ideas are admitted into the incubators, where they are offered a specialised menu of support resources and services.

ReferencesSingh, B., 2009. • Entrepreneurship Development. Wisdom Publications, Delhi. Chapter 7.Biz Facts, Department of Trade and Economic Development, Adelaide, SA.• Strydon, J., Antonites, A., Andreas de Beer, 2009. • Entrepreneurship & How to Establish Your Own Business. Juta and Company Ltd., Chapter 2.

Recommended ReadingCentre of Business Planning• . Available at: <http://www.businessplans.org> [Accessed 2 December 2010].Dr. Ambilikumar, V., • Entrepreneurship Development, Kerala Agriculture University Available at: <http://www.slideworld.com/slideshow.aspx/entrepreneurship-development> [Accessed 2 December 2010].