Introduction to Entrepreneurship and Small Business Management

What is Business?
Zoltan Acs, a noted economist, defined a business as a

conscious, willful effort to organize economic activity that consists of a collection of contracts when more than one party is involved. A business is a legal entity, recognized by law, which is permitted to enter into binding contracts with persons or other businesses.

Forms of Business
Sole Proprietorship
Partnership Corporations

Sole Proprietorship
A sole proprietorship is a business owned by a single

individual that is not incorporated. The life of the organization is limited to the life of the individual who started it. Advantages: It is easy and inexpensive to form, and, once operating, it is subject to few government regulations. It pays no corporate income taxes, and its earnings are taxed at the owners tax rate. Disadvantages: The business usually has difficulty obtaining large sums of capital (money). The proprietors have unlimited liability for business debts.

Partnership
A partnership exists when two or more persons associate to

conduct a non-corporate business. Partnerships may operate under different degrees of formality ranging from informal (oral understandings) to formal agreements. Advantages: Low cost Ease of formation Disadvantages: Unlimited liability of the partners Limited life of the organization Difficulty of transferring ownership Difficulty in obtaining large sums of capital (money)

Corporation
A corporation is a legal entity recognized by the state. A

corporation by law must display Inc. Advantages: It permits limited liability for the owners since they only own shares of stock of the corporation. It permits easy transfer of ownership since there are rarely conditions placed on buying or selling stock. It has unlimited life. It can continue to operate long after the original owners have departed. Disadvantages: The legal costs of forming and maintaining the corporation can be substantial. The formation may require substantial legal effort and a fair amount of government regulation.

Promoter of All BusinessesEntrepreneur

Entrepreneur
He is an agent who buys factors of production at

certain prices in order to combine them into a product with a view to selling them at uncertain prices in future. He is an organizer who combines the land, labour and capital to produce a product. This gives three implicit factors to be inherent in him:
Moral Qualities for work judgment Command over sufficient capital Uncertainty of profits.

Entrepreneur
As an innovator (Schumpeter) The introduction of the new product in the market. The instituting of the new production technology. The opening of new market. The discovery of new source of supply of raw material The carrying out of the new form of organisation of any industry by creating of a monopolyposition or the breaking up of it.

Characteristics
Hard work
Desire for High Achievement Highly Optimiastic

Independence
Foresight Good Organiser Innovation

Functions
Idea generation
Scanning of the best suitable idea Determination of the business objectives

Product analysis
Market research Determination of form of ownership Raising necessary funds Recruitment of men

Difference between Entrepreneur and Manager

On the basis of Motive
On the basis of Status On the basis of Risk-bearing

On the basis of Rewards

On the basis of Innovation On the basis of Qualification

Types of Entrepreneur
There are many types of entrepreneur on the basis of

skills, on the basis of need, etc. But most prominent and universal are of four types Innovative Entrepreneurs Imitative Entrepreneurs Fabian Entrepreneurs Drone Entrepreneurs

Innovative Entrepreneurs
Entrepreneurs which use their creativeness and logical

thinking for doing something new. The new can be anything of the following:
Bringing new product in the market New technology New market and much more.

These possess characteristics like creativity, problem solving, foresightedness etc.

Bill Gates 1955 Example

By linking his Microsoft software to IBM's first PCs, he dominated the industry. He developed a two-prong strategy of expanding the market while maintaining a strong hold on competitors.

Michael Dell 1965

Created a new model for PC sales
Cutting out the retail middleman and custombuilding computers to suit buyers needs put Dell at

the front of the class of PC makers.

Muhammad Yunus 1940

Founded a banking system

30 years ago

To lend small amounts of

money to the rural poor in Bangladeshi villages. winner,

2006 Nobel Peace Prize

Imitative Entrepreneurs
The persons who work according to the others

innovations, strategies etc. and copy others way of doing business.

Examples from Your side!!!!!

Fabian Entrepreneurs
Fabian Entrepreneurs are characterized 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.

Entrepreneurship
Entrepreneurship is the attempt to create value

through recognition of business opportunity, the management of risk taking appropriate to the opportunity and through the communicative and management skills to mobilize human, finanacial and material resources necessary to bring a project to fruition.