Entrepreneur: Meaning, Concept, Types, Skills, Functions, Qualities

A most appropriate definition of entrepreneur is that, “he is a man who detects and evaluates a new situation in his environment and directs the making of such adjustments in the economic systems as he deems necessary”.

In actual practice the term “entrepreneur” is attributed to all small industrialists, small businessmen, and traders. All people who are gainfully engaged in work of manufacturing, distribution or service and other sectors are called entrepreneurs.

Learn about:-

1. Meaning of Entrepreneur 2. Concept of Entrepreneur 3. Nature 4. Views 5. Types 6. Pre-Decision Preparation to Enter Business 7. Skills Required

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8. Functions 9. Qualities 10. Social Responsibility 11. Self-Employment Programmes 12. Pros and Cons 13. Weaknesses.

Contents:

Meaning and definition of Entrepreneur
Concept of Entrepreneur
Nature of Entrepreneur
Views on Entrepreneur
Types of Entrepreneurs
Pre-Decision Preparation to Enter Business
Skills Required for an Entrepreneur
Functions of Entrepreneurs
Qualities of an Entrepreneur
Social Responsibility of Entrepreneurs
Self-Employment Programmes for Entrepreneur
Pros and Cons of being an Entrepreneur
Weaknesses of Entrepreneurs

Entrepreneur: Meaning, Definition, Concept, Nature, Types, Skills, Functions, Qualities, Weaknesses and Social Responsibility

Entrepreneur – Meaning and Definition

An entrepreneur is one who innovates, raises money, assembles inputs, chooses managers and sets the organisation going with his ability to identify them. Innovation occurs through:

(a) The introduction of a new quality product,

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(b) A new product,

(d) By changes in the organisation and management.

An entrepreneur in a developing economy is one who starts an industry, undertakes risk, bears uncertainties and also performs the managerial functions of decision-making and coordination.

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An entrepreneur performs one or more of the following:

(i) Perceives opportunities for profitable investments,

(ii) Explores the prospects of starting a manufacturing enterprise,

(iii) Obtains necessary industrial licenses,

(iv) Arranges initial capital,

(v) Provides personal guarantees to the financial institution,

(vi) Promises to meet the shortfalls in the capital, and

(vii) Supplies technical know-how.

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As a catalytic agent the entrepreneur has to change the mindset of the workers so that they accept radical changes in system structure and processes which the organisation is contemplating to introduce in order to complete the rivals. The most important is to change the key value, beliefs and norms established and accepted by the workers.

These changes are necessary in the organisation to stress on productivity, quality, speed, innovation, customer orientation and empowerment. For this purpose an entrepreneur is expected to play a pivotal role in developing among the employees requisite knowledge, skills and suitable attitudes, and improve their performance.

Entrepreneur is an organizer and speculator of a business enterprise. Entrepreneur lifts economic resources out of an area of lower to an area of higher productivity and greater yield.

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Entrepreneur is often associated with a person who starts his own new small business.

Entrepreneur – Concept

To trace the genesis of the word entrepreneur it would be prudent to look at word ‘entrepredre’ in French which literally means “between-taker” or “go- between.” The theoretical growth of the concept of entrepreneurship has taken place side by side with growth of term itself.

Entrepreneur refers to individuals who were ‘undertakers’, meaning those who “undertook” the risk of new enterprise.

In several literature reviews, it has been observed that as early as in the sixteenth century the Frenchmen who use to organize and lead military expeditions were referred to as entrepreneurs.

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In the early 18th century French economist Richard Cantillon used the term entrepreneur to business. Entrepreneur was a dealer who purchases the means of production for combining them into marketable products. Since then the word entrepreneur refers to one who takes the risk of starting a new organization or introducing a new idea, product or service.

Entrepreneur is the most important factor in the process of economic development. He occupies the central place in the growth process because he initiates development in a society and carries it forward. As a change agent, the entrepreneur is the first and foremost a catalyst for change.

The function that is specific to entrepreneur is the ability to take the factors of production—land, labour and capital and use them to produce new goods or services. The entrepreneur perceives opportunities. He works as an originator of a new business venture and also tries to improve an organisation unit by initiating productive changes.

The word entrepreneur is derived from the French word ‘enterprendre’ and its literal meaning is “to undertake.” It was applied to leaders of military expeditions in the early 16th century. However, around 1790 A.D., it was used in the context of other types of adventures like architects and contractors of public works.

The Oxford English Dictionary in 1887 states that “entrepreneur simply is the director or manager of a public musical institution; one who puts up entertainments, especially musical performance.” A further revision has appeared in it in 1933 and the word entrepreneur had a place in business and would mean “one who undertakes an enterprise especially a contractor acting as intermediary between capital and labour.”

In this way, undertaking of an enterprise is regarded as entrepreneurship and one who undertakes it—one who coordinates capital and labour for the purpose of production is an entrepreneur. Actually, this emerging class is generally treated as the entrepreneurial class.

Entrepreneur – Nature

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The entrepreneur is expected to identify the environmental change as an opportunity and uses the factors of production to produce new goods and services.

He is motivated to:

(i) The desire to find a private commercial kingdom,

(ii) The will to conquer and prove his superiority and,

(iii) The joy of creating, getting things done or simply of exercising one’s energy and ingenuity.

In this process, entrepreneur is expected to possess certain attitudes and values in order to perform the expected entrepreneurial behaviour. The expectations regarding entrepreneurial values and attributes were termed as entrepreneurial orientation. Entrepreneurial orientation is prerequisite condition for an entrepreneur.

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Entrepreneurial orientation consists of, (i) risk bearing propensity, (ii) change process, (iii) ambition, (iv) long-term profit perspective, (v) positive attitudes towards management and workers. The term ‘entrepreneur’ may be used in connection with those who incubate new ideas, start enterprises based on those ideas and provide added value to society based on their independent initiative.

Thus, there are typical characteristics of a person who takes up entrepreneurial career in preference to other opportunities. He prefers to take a risk and start his enterprise rather than take up a job. In terms of motivation, he has a need for achievement, need for power and need for affiliation.

Moreover, it is the profit that induces the prospective entrepreneur to get into the business and start new activities or expand the existing activities. Profit, therefore, is a factor which induces the entrepreneur to organise and utilise the factors of production for development. It does not necessarily mean that entrepreneur is concerned only in the pecuniary profits.

He is an innovator to bring change with certain achievement motive and that achievement motive may also mean something more than money. “For such entrepreneurs to function effectively we need an appropriate social climate.” Social climate plays a very important role in the industrialisation of any region.

Industrially backward areas in some cases, possess the requisite infrastructure and availability of financial incentives yet they have not succeeded well with their efforts at industrialisation to the desired extent only because they lack entrepreneurs with positive attitudes, culture and values.

Entrepreneur – Views on Entrepreneurs

The word ‘entrepreneur’ has been taken from the French language, and it originally means an organiser of musical or other entertainments. In the early 16th century, it was applied to those who were engaged in military expeditions. It was extended to cover civil engineering activities such as construction in the 17th century.

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It was only in the beginning of the 18th century that the word was used to refer to economic aspects. In this way, the evolution of the concept of entrepreneur is considered over more than four centuries old. The term ‘entrepreneur’ is used in various ways and views.

Broadly the three main views are:

1. Entrepreneur as a Risk Bearer:

‘Richard Cantillon’ (Irish) was the first person who introduced the term ‘entrepreneur’ and his unique risk-bearing function in economics in the early 18th century. He defined entrepreneur as an agent who buys factors of production at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future. Thus, it is a risk bearing activity.

2. Entrepreneur as an Organiser:

Jean-Baptiste say, developed the concept of entrepreneur by associating it with the functions of co-ordination, organization and supervision. According to him an entrepreneur is one who combines the land of one, the labour of another and capital of yet another and thus produces a product.

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By selling the product in the market, he pays interest on capital, rent on land and wages to labourers and what remains is his/her profit. Thus an entrepreneur is an organiser.

3. Entrepreneur as an Innovator:

“Joseph A. Schumpeter” in 1934, assigned a crucial role of ‘innovation’ to the entrepreneur. He considered economic development as a dynamic change brought by entrepreneur by instituting new combinations of factors of production, i.e., innovations.

The introduction of new combination of, according to him, may occur in any of the following forms:

(a) Introduction of new product in the market.

(b) Use of a new production technology.

(d) Discovery of a new source of supply of raw materials.

Definition:

Thus an Entrepreneur can be defined as a person who tries to create something new, organises production and undertakes risks and handles economic uncertainty involved in enterprise, e.g., Ambani, Tata, Birla, Modi, Dalmia etc.

Entrepreneur – Types

Entrepreneurs can be classified as under:

1. According to the type of business:

(i) Business entrepreneurs

(ii) Trading entrepreneurs

(iii) Industrial entrepreneurs

(a) Large

(b) Medium

(d) Tiny.

(iv) Agricultural entrepreneurs

(a) Plantation

(b) Horticulture

(d) Forestry

(v) Retail entrepreneurs

(vi) Service entrepreneurs.

2. According to the use of Technology:

(i) Technical entrepreneurs.

(ii) Non-technical entrepreneurs.

(iii) Professional entrepreneurs.

(iv) High-tech entrepreneurs.

(v) Low-tech entrepreneurs.

3. According to the scale of operation:

(i) Small scale entrepreneurs.

(ii) Large scale entrepreneurs.

4. According to the stages of development:

(i) First generation entrepreneurs.

(ii) Modern entrepreneurs.

(iii) Classical entrepreneurs.

5. According to the Area:

(i) Urban entrepreneurs.

(ii) Rural entrepreneurs.

6. Other types or unclassified types:

(i) Traditional entrepreneurs.

(ii) Skilled entrepreneurs.

(iii) Non-skilled entrepreneurs.

(iv) Inherited entrepreneurs.

(v) Bureaucratic entrepreneurs.

(vi) Immigrant entrepreneurs.

Entrepreneur – Pre-Decision Preparation to Enter Business

Before one takes a decision to go into business one has to take a long and careful look at oneself. By now it should be clear that the career of an entrepreneur is certainly no bed of roses.

The following are some of the points that one must ponder before taking the plunge:

1. Introspect; Consider if you are Suited to Business:

At the very outset one should ask oneself – Am I the right person to embark on such a venture? Remember that success or failure in business purely depends on oneself. Thus ask yourself – Am I capable of taking a decision? Am I capable of working hard and for long hours? If the answer is in the affirmative then go ahead.

2. Total Responsibility:

A prospective entrepreneur must be ready and prepared to bear total responsibility for running the show—business in this case. He/she must be willing to perform all business functions such as – purchasing inputs, maintaining stock, selling, costing, managing, etc. An entrepreneur has to take a decision on all aspects of the venture.

He/she does not have anyone else to shift the responsibility. It is not the same as delegation of task to resource personnel. He/she has to be a hard task master.

3. Business is Prime:

A man thinking about starting his own enterprise cannot ever afford to forget the business. It is his creation. It must always be uppermost in his thoughts and in moments of crises he will have to pay complete attention. At the outset, the creator of a new business must be prepared to work for long hours.

All employees may go but the owner would have to work and plan. He/she would not have enough money; therefore, at times, they might have to undertake many tasks that they would later on ask employees to perform.

4. Forego Leisure:

A person who is not prepared to forego his/her leisure world would do well to forget all about setting up an enterprise.

5. Vision:

Many a time, an entrepreneur may fail because they kept their nose pressed too closely on the grindstone. The person probably did work hard, and for long hours but the mistake lies purely on concentrating only on one or a few of the facts of the business. An entrepreneur must know where he is going. He must know how the business will fare in the next few years. They may not attain their ambition, but the business has to be planned and executed.

6. Adaptive Approach:

Nothing in business is static. Everything is changing. But one thing is sure. If one door shuts another almost always opens, i.e., opportunities keep cropping up. A successful entrepreneur would be one who keeps abreast of changing times, is adaptive to change and new opportunities coming his or her way.

7. Balance Family and Business:

An entrepreneur must have a perfect understanding with his or her family members. They are bound to neglect everything else except business. That means some degree of sacrifice is required on part of the entrepreneur and family members for the sake of successful business.

Without proper understanding there will be constant friction between the entrepreneur and family members. Friction at home could make the difference between the success and failure of the business. It is, thus, imperative to strike some kind of balance to bring about harmony on both fronts.

8. Acquire Knowledge and Skills:

An entrepreneur would do well to choose a business about which he/she knew something. A small business can prosper only if the entrepreneur knows exactly what he/she is doing. Therefore, one must go into something in which one has some experience, or learn all about the business beforehand.

This information and skills can be gathered by reading relevant books, from people doing similar business and information from advisers. At times one may seek employment in a similar business for a handsome experience before starting out on one’s own. All this will facilitate a prospective entrepreneur to gain practical knowledge.

Starting on one’s own is not an easy task. At first, failure is round the corner. One can succeed if one has knowledge and know-how. One can acquire knowledge and know-how if one gives time to one self and gather experience.

Entrepreneur – Skills Required for an Entrepreneur

An entrepreneur needs intuition, creative thinking and innovative ability. Entrepreneurs were not born; they learned to become entrepreneurs. They can learn and improve their skills through various training programmes for entrepreneurs.

The following skills are required for an entrepreneur:

1. Conceptual – An entrepreneur has the ability to identify relationships quickly in the midst of complex situations. He identifies problems and begins to work in their solution faster than other people.

2. Technical – A good entrepreneur should have interest to explore new ideas, new technology and new production method. He must have a reasonable level of technical knowledge.

3. Human Relation – An entrepreneur should maintain good relations with his customers and the public. He must also maintain good relations with his employees to motivate them to higher levels of efficiency.

4. Communication – Communication of an entrepreneur must be to the point, crisp and convincing. Communication ability is the secret of the success of most entrepreneurs.

5. Decision-making – It means the ability to choose the correct alternative from a numbers of alternatives. An entrepreneur should have the ability to analyse the various aspects of the business to arrive at a decision.

6. Managerial – An entrepreneur should have the skill to manage the men and other factors of production. He should be able to select, train and maintain the persons composing of labour force.

7. Time Management – Time Management is the act or process of exercising continuous control over time spent on specific activities. This is necessary to increase efficiency or productivity. An entrepreneur must possess this skill to manage the time.

8. Stress Management – Stress management is one of the keys to a happy and successful life in modern society. It is the best way to manage anxiety and maintain overall well-being. Entrepreneur must be able to adopt various mechanisms to control the level of stress.

9. Personality and Individual skill – Impressive personality and individual skill help to develop entrepreneurship. These qualities are inevitable for entrepreneurs since they have to work with officers, engineers, labourers, customers, investors, Govt. officers, etc.

10. Pioneering – Entrepreneurs have the skill to explore into new opportunities. They always like discover new methods of production and new markets. Thus, they are pioneers in their own field.

11. Unification and Organization – An entrepreneur comes in contact with many unions and organizations. He has to arrange many things in many ways and to unite all of them for a common goal. So, he must have unification and organization skills.

12. Computer knowledge – If an entrepreneur is computer literate he can use the computers and software to perform different aspects of his jobs. Computer is a helpful tool for decision-making. Some important applications of the internet are e-mail, telnet, acquiring software and world-wide web.

Entrepreneur – Functions: Innovation, Risk-Taking, Organisation and Management, Business Decisions

Function # 1. Innovation:

Innovation means doing the new things or the doing of things that are already being done in a new way. This innovation is the process of doing new things. However, there is distinction between creativity and innovation. Creativity is the ability to bring something new into existence.

Practically, it is the ability, not the activity of bringing something new into existence. It is possible for a person to conceive of something new and envision how it will be useful but not necessarily take the necessary action to make it a reality.

It is also possible that ideas generated in the mind of a man have little value until they are converted into new products, services or processes. But “innovation is the transformation of creative ideas into useful applications but creativity is a prerequisite to innovation.”

Schumpeter described entrepreneurs as innovators who use the process of shatter the status quo through new combinations of resources and new method of commerce. It includes new processes of production, introduction of new products, and creation of new markets, discovery of a new and better form of industrial organisation.

Peter Drucker also elaborates that innovation is the specific tool of entrepreneurs the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced.

Entrepreneurs need search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. They need to know and to apply the principles of successful innovation. Thus, innovation is the development process. It translates an idea into an application. It requires entrepreneur to work out the detail of product design or service analytically, to develop marketing, obtain finance and plan operations.

Function # 2. Risk-Taking:

The risk is the condition of not knowing the outcome of an activity or decision. Nevertheless, risk is capable of being evaluated for relative probabilities. Risk bearing means provision for capital in order to enable the entrepreneur to establish and operate the business.

Economists like Cantillon. J.B. Say and others stressed risk taking as the specific function of an entrepreneur. Entrepreneur is required to reduce uncertainty in his investment strategies by initiating expansion and diversification programmes in the enterprise. In this connection, Drucker observed that entrepreneurial behaviour is risky because so few of the so-called entrepreneurs know what they are doing.

They lack the methodology. They violate elementary and well-known rules. So, entrepreneur should try to reduce the level of uncertainty by analysing the problem in proper perspective.

Actually, “business game consists of great risks and rewards are also great when risks are successfully covered. The ability to perform services and the risks involved are inseparable. Therefore, for successfully covering the risks, highest order of ability is required. A successful entrepreneur would be one who has trait, patience, sagacity, power of observation and wisdom and ability of discrimination. He should be mentally alert, gifted with discernment, practically acute-minded, shrewd and an exceptionally intelligent person.”

Thus, entrepreneurs are required to perform this function—risk taking as well as risk bearing at the same time. They are the owner as well as executor of the business enterprise.

Function # 3. Organisation and Management:

The process of organisation and management includes planning of an enterprise coordination, control and supervision. Prof. Alfred Marshal recognised this function as an important function of an entrepreneur.

Entrepreneurs often fall into the trap of thinking that just because their business is small, they do not really need a comprehensive system of organisation and management. They may rationalise that by designing an effective organisational and management control system or they cannot improve their capabilities because of their limited knowledge about possible methods of effective control.

But entrepreneur are expected to develop an effective organisation and management system in the organisation. They have to interact directly with employees and exchange information about what is going on in the firm. They tend to be directly involved in their organisation’s operational activities to ensure effective control. They are expected to formulate plans, production strategies, and financial management and develop marketing channels and management of personnel.

Function # 4. Business Decisions:

Arther H. Cole described an entrepreneur as a decision maker. The decisions with regard to what to produce, how to produce and for whom to produce are to be taken by the entrepreneur himself. In this connection, he has to implement his innovative process.

Prof. Cole described the functions of an entrepreneur as:

(i) The determination of those objectives of the enterprise and the change of those objectives as conditions required or made advantageous;

(ii) The development of an organisation including efficient relations with subordinates and all employees;

(iii) The securing of adequate financial resource, the relations with existing and potential investors;

(iv) The requisition of efficient technological equipment and the revision of it as new machinery appeared;

(v) The development of a market for products and the devising of a new product to meet or anticipate consumers demand;

(vi) The maintenance of a good relations with public authorities and with society at large. Thus, the entrepreneur is an institution himself and he performs various functions related with organisation development and management control. He is supposed to bear the risk, manage, innovate, organise and take decisions with regard to his business empire.

Entrepreneur – 14 Important Qualities

1. Self confidence.

2. Result oriented.

3. Risk taker.

4. Innovativeness, creativity.

5. Knowledgeable.

6. Open minded, and flexible.

7. Foresightedness.

8. Leadership.

9. Managerial competence.

10. Realistic approach.

11. Energetic and hardworking.

12. Resourcefulness.

13. Tactfulness.

14. Clarity of views.

Entrepreneur – Social Responsibility

Entrepreneurs are basically change agents. They are the ones who transform problems into opportunities. In other words, entrepreneurs play a significant role in solving several problems prevalent in the society such as providing employment and contributing to the growth of economy.

Entrepreneurs, thus, must act in ways that enhance the society’s well-being. They should use their entrepreneurial skills to work for a safer and better society. Interestingly, in most societies, the general public has a different opinion about entrepreneurs and businessmen.

They are seen as people with very low moral and ethical standards, who’s main aim is to make profits at any cost, exploit the consumers and their innocence, misuse state machinery in their favour, etc. In other words, they have no social obligations and they acknowledge no responsibility to the community.

As an entrepreneur is the owner of his business, he too is of the impression that he has a legitimate right to do with it what he pleases. Social welfare is not his responsibility. However, the attitude no longer holds good. The recognition of social responsibility has been termed as the emergence of corporate conscience.

It means, business is not an end in itself. It is only a means to an end. That end is humankind itself. Therefore, a business has to contribute to a person’s happiness, their freedom, and their material, moral, and spiritual growth.

According to the classical view, if a business strives to utilize as efficiently as possible the resources at its disposal in producing the requisite, goods and services, it is acting in a socially responsible manner. Now the concept of social responsibility has enlarged very much, although there is no consensus on its definition or the extent of its scope.

According to Bowen, a businessman has an obligation to pursue those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of society. It means, entrepreneurs must recognize and understand the aspirations of the society and determine to contribute to its achievement.

Keith Davis says, ‘social responsibility begins where the law ends.’ Irving Kristol says, ‘business tends to operate too narrowly within the constraints of economic concern. The businessman must act within the broader context of the human community.

George Cabot Lodge says ‘your right to enjoy is no longer subject merely to paying your taxes and obeying the laws. It is subject to the needs of the people who work for you as well as of the entire community. It’s not that property rights are wiped out, it’s just that they become less important’.

Need for Social Responsibilities:

i. The basic responsibility of any entrepreneur is his/her existence as a venture creator because the society exists. Therefore, one has to feel the obligation to consider interest of that society while carrying out the business.

ii. The entrepreneur survives because the society’s interest is being served. So the entrepreneur’s interest must go together with the society’s interest.

iii. If the society’s interest is considered as its objective, the venture can get a better image in that society. Better image naturally leads to better business and more profits to the organization.

iv. The interference of government rules and regulations in the affairs of the enterprise will be minimum or nil if the enterprise carries out its activities in accordance with the society.

v. It is the responsibility of the entrepreneur to use the available resources judiciously. Otherwise, exploitation will naturally lead to uneven development in the society.

vi. If the entrepreneur works in accordance with societal requirements, it can get integrated into the society; otherwise, the society will see the enterprise as a negative element in the society.

vii. Entrepreneurs get business opportunities from the society which in turn leads to expansion of the business and survival.

Socially Responsible Activities of Entrepreneurs:

The following entrepreneurial activities can be termed as socially responsible:

i. Undertake the business activities which are socially acceptable and relevant to the needs and wants of the market.

ii. Entrepreneurs have to carry out the business based on set of ethics.

iii. Develop the business activities which protect the environment of the consumer in general and society in particular.

iv. Entrepreneurial actives must be enhancing the moral climate of the society.

Sachar Committee’s Suggestions:

In addition to the traditional social responsibilities towards the society including protecting the interest of the owners of the companies, welfare of the employees, overall interest of the consumers and other economic objectives, entrepreneurs have to take care of social objectives.

There should be a place for ethics and values while conducting the business activities. Since majority of the companies fail to take care of the overall well-being of the society, Sachar committee in 1978 made a number of suggestions in this regard.

The following are some of its suggestions:

i. Adequate disclosure of information for the benefit of stakeholders like shareholders, creditors, workers, and the community.

ii. Social cost benefit analysis must be considered while making investment decisions not only in public sector but also in private sector.

iii. Accountability on the part of the entrepreneurs are equally important while carrying out its business activities.

iv. Preferences should be given to establish industries in rural areas to ensure balanced development.

v. Employment opportunities should be given to not only local skills but also physically challenged people.

vi. Entrepreneurs must spread awareness about the social problems like adult literacy, female literacy, etc.

vii. Establish industries which protect the existing environment.

viii. Produce eco-friendly products.

ix. Export eco-friendly goods and services.

x. Follow green consumerism.

India has a legislation to ensure environmental protection. Under the National Environmental Protection Act, Environment Impact Assessment and Environment Impact Statement reports are mandatory before the launch of any big development project.

However, it has been reported that the Government has proposed sweeping changes in the prevailing laws for environmental clearance so as to facilitate industrial development. This has evoked strong reactions from environmentalists, who allege that the government has quietly made serious compromises on the issue of environment protection.

Entrepreneur – Self-Employment Programmes for Entrepreneurs

Self-employment programmes in the country offer tremendous opportunities to people to set up small enterprises in various areas of industry, service, business, and agro-related activities. Like the IRDP, these programmes are considered a potent weapon against poverty and unemployment.

Essentially, non-farm sector opportunities can be considered by prospective entrepreneurs for setting up enterprises of various investment ranges. Though self-employment programmes cover relatively low investment activities as part of the anti-poverty measures, self-employment activities can also be planned in the middle and higher investment ranges.

These activities need large quantum of funds for fixed and working capital. Assistance from banks and other financial institutions could be availed for this purpose.

Apart from the Union Ministries of Small Scale Industries, Agro and Rural Industries, Textiles, and Communications and Information Technology, and Department of Food Processing Industries, a number of other ministries of the Government of India and their specialized institutions at national and state levels have been making their contribution for promotion of such enterprises, and diversification of the occupational base in rural and urban areas.

Banks and development financial institutions, with the overall support from SIDBI and NABARD (National Bank for Agriculture and Rural Development) have been involved in a big way in encouraging individual entrepreneurs, and groups of entrepreneurs or registered institutions, and NGOs to take up this role.

Union Ministries of Rural Development and Housing, Urban Employment and Poverty Alleviation have been engaged in non-farm sector development by supporting economically weaker sections in particular, under various self-employment programmes such as Swarnjayanti Gram Swarozgar Yojana (SGSY) and Swarnajayanti Shahari Rozgar Yojana (SJSRY).

Union Ministries of Social Welfare and Women and Child Development are implementing programmes for women. Weaker section low-income women are also covered under programmes of various ministries.

Two self-employment schemes under the Ministry of Agro and Rural Industries are Prime Minister’s Rozgar Yojana (PMRY) coordinated by the Development Commissioner (Small Scale Industries), and Rural Employment Generation Programme (REGP) coordinated by Khadi and Village Industries Commission (KVIC).

1. Self Help Groups:

Bank financing at the field level is supported by NABARD, and by SIDBI at the apex level through refinancing. NABARD set up Micro Finance Development and Equity Fund (MFDEF) in 2000, while SIDBI set up SIDBI Foundation for Micro Credit (SFMC) in 1999. NABARD’s involvement in micro finance is much older and far more extensive in comparison.

The Self Help Groups (SHG) approach with micro finance was made available by commercial banks through NGOs and Self Help Promoting Institutions (SHPIs). It has become popular in some of the states, particularly in the south and west of the country. In the North Eastern states, it is gaining momentum.

Major Self-Employment Programmes and District Level Contact Organizations:

Programme:

i. PMRY – Prime Minister’s Rozgar Yojana

ii. REGP- Rural Employment Generation Programme

iii. SGSY – Swarnjayanti Gram Swarozgar Yojana

iv. SGSRY – Swarnjayanti Shahari Rozgar Yojana

v. Rajiv Yuva Shakti – Empowerment of youth, exclusively in Andhra Pradesh by State Government.

vi. Schemes of public sector banks, financial institutions, and other specialized institutions like Women Development Corporation, Social Welfare Board, Renewable Energy Development Corporation, weaker section corporations (SC, BC, ST, and minority corporations), etc.

District Level Organization:

i. District Industries Centre (DIC)

ii. Khadi and Village Industries Commission (KVIC)/ Board (KVIB)

iii. District Rural Development Agency (DRDA)

iv. Municipality, Municipal Corporation, And District Urban Development Agency (DUDA)

v. District Youth Welfare Office

vi. Respective organizations at the district level.

In the implementation of these programmes, the field level agency of the respective organizations undertakes the promotional task, provides subsidy/margin money towards the equity of the project, to supplement the contribution expected from the entrepreneur.

Commercial banks/Grameen banks/Co-operative banks provide loan and Apex developmental banks—NABARD and SIDBI—provide refinancing support to primary lending institutions, and also participate in capacity building of personnel of institutions and entrepreneurs through Non-governmental organizations and other institutions.

Developmental organizations provide training of entrepreneurs and creation of infrastructure facilities to groups of entrepreneurs, as part of the implementation of the scheme. The task is, thus, implemented through various agencies, including NGOs at the field level.

2. Prime Minister’s Rozgar Yojana (PMRY):

Under the Prime Minister’s Rozgar Yojana (PMRY) of the Union Ministry of Agro and Rural Industries, self-employment ventures are promoted in urban and rural areas by educated unemployed youth. At the field level, District Industries Centre (DIC) operates the scheme, coordination at the state level is by Commissioner of Industries, and at the national level by Development Commissioner (Small Scale Industries).

Experience of recent year’s shows that it is more urban-oriented as the response is better there; while awareness in rural areas, specially among weaker sections and women, is still limited. The ventures can be promoted in either industry, service, business, or agro-related activities.

In the North East and three other hill states, the scheme also covers horticulture, piggery, fishing, and forestry. Project outlay can go up to Rs. 2 lakh for activities other than industry, and Rs. 5 lakh for industrial enterprises. Subsidy component is at 15 per cent of project outlay, subject to a maximum of Rs. 15,000 in the North Eastern states, and three other hill states of Uttarakhand, Himachal Pradesh, and Jammu and Kashmir; and Rs. 12,500 in the rest of the country.

Subsidy and promoter’s contribution together should total 20 per cent of the project outlay. Promoter’s contribution in respect of business is 5% in the North East and three other hill states; and ranges from 5% to 12.5% in other parts of the country. In respect to other activities, it ranges from 5% to 12.5% in North East and three other hill states; and 5% to 16.25% in other parts of the country. Reservation among candidates assisted is 22.5% for SCs/STs, and 27% for the backward classes. Women are given preference.

In the North East and three other hill states, age group for prospective entrepreneurs considered is 18 to 40 years In respect of SCs/STs, ex-service men, physically handicapped and women, the upper age limit is up to 45 years In other parts of the country, the age group considered is 18 to 35, and up to 45 years for SCs/STs, ex-service men, physically handicapped, and women.

Minimum education required is eighth standard pass. Preference is given to candidates with technical/vocational training of at least six months. Existing family income of the beneficiary should not exceed Rs. 1 lakh per annum. This refers to the income of the beneficiary and the spouse if the beneficiary is married, and income of the parents of the beneficiary, if the beneficiary is not married.

Residence of the candidate of at least three years is insisted upon; and in the family, there should not be a defaulter to any financial institution/bank/other institutional sources. Residence criterion is relaxed for married men in Meghalaya, and for married women in the rest of the country.

In respect of these cases, the residence criterion applies to the spouse or in-laws. Two to five persons can join for promoting a venture, in which case the project outlay and subsidy amount will be multiple of the amount admissible to an individual, based on the number of persons joining, the project outlay being limited to a ceiling of Rs. 10 lakh.

Self Help Groups (SHGs) are also eligible for PMRY assistance. There is no upper limit on the loan sanctioned for SHGs. SHGs may undertake common economic activity for which loan is sanctioned based on project approach without resorting to onward lending to its members. Loan may be provided as per individual eligibility, taking into account the requirements of the project. A SHG may consist of 5 to 20 educated unemployed youth fulfilling the eligibility criteria of PMRY.

Subsidy may be provided to the SHG as per the eligibility of individual members, subject to a maximum of Rs. 15,000 per person in the North East and three other hill states; and Rs. 12,500 in the rest of the country with overall maximum of Rs. 1.25 lakh per SHG. Required margin money contribution should be mobilized by SHG members collectively. Subsidy and margin money to be brought by the promoters should be equal to 20 per cent of project outlay.

3. Rural Employment Generation Programme (REGP):

Under the Rural Employment Generation Programme (REGP) of Khadi and Village Industries Commission (KVIC), the following categories of persons and institutions can promote village industries- individual entrepreneurs, self-help groups, institutions, cooperative societies, trusts, and public limited companies of State/Central Government.

At the field level, officials of the Khadi and Village Industries Board (KVIB) are the contact persons, under the overall guidance and coordination of state level KVIB and KVIC.

All viable village industries-projects except those specified in the negative list of village industries announced by KVIC are covered by REGP. The definition of a village industry, which has been adopted by KVIC for industries in rural areas and towns up to 20,000 populations, is applicable for REGP.

The per capita fixed investment limit excluding land of a full time artisan or worker for a village industry is stipulated as Rs. 1 lakh for plain areas, and Rs. 1.5 lakh for hill areas from May 2006.

Individuals can take up projects by investing up to Rs. 10 lakh. Institutions/cooperative societies/trusts can take up projects by investing up to Rs. 25 lakh. By adopting the project approach, credit is made available by scheduled commercial banks to enterprises, for which 25% of project outlay would be the tail-end grant that can be given by KVIC after observing satisfactory performance of the enterprise.

In respect of advances above Rs. 10 lakh, margin money given by KVIC routed through KVIB is at 25% of project outlay up to Rs. 10 lakh; and at 10% for the balance amount. For weaker sections, and in hill, border and tribal areas, and other designated backward areas such as – North East, Andaman and Nicobar Islands, and Lakshadweep, margin money from KVIC/KVIB is 30% of project outlay up to Rs. 10 lakh; and above this amount up to Rs. 25 lakh, it is 10 per cent of the remaining amount.

Once the margin money is released in favour of the loanee, it is kept in the term deposit receipt (TDR) of two years at the branch level in the name of beneficiary/institution. No interest is paid on the TDR, and no interest is charged on loan to the corresponding amount of TDR.

Project outlay includes one cycle of working capital. Promoter’s contribution needed is 10% of the total outlay for general category, and 5% in case of other categories mentioned above including the North East and other areas.

Banks initially sanction 90% of the project outlay in case of general category of beneficiary/institution, and 95% of the project outlay in respect of others; and disburse the full amount needed for setting up the project within the permissible limit. Margin money is one time assistance from KVIC.

For any enhancement of credit limit, KVIC margin money assistance is not available. Banks make techno- economic appraisal of projects and take decision on the amount of loan to be sanctioned based on the viability of each project.

KVI institutions/non-governmental organizations at the field level undertake the responsibility for planning and counselling entrepreneurs. They have a significant role to play in supplementing a bank’s efforts in monitoring and supervision of advances as well as in the recovery of loans.

A rural industrial consultancy service has been established in KVI institutions, and through reputed NGOs, technical institutions, and chartered accountant firms. Marketing support is extended to REGP enterprises through KVI network of sales outlets and voluntary organizations.

4. Swarnjayanti Gram Swarozgar Yojana (SGSY):

Under Swarnjayanti Gram Swarozgar Yojana (SGSY) of the Union Ministry of Rural Development, a holistic programme of micro enterprises was launched from 1999 covering all aspects of sustainable self-employment in rural areas. It envisages organization of the poor, with preference for self-help groups of women in particular, and capacity building through SHGs, training, credit-cum-subsidy, technology, infrastructure, and marketing intervention.

At the field level, the District Rural Development Agency (DRDA) operates the scheme through Panchayat Samities. Training and Technology Development Centre (TTDC) is established under the umbrella of DRDA for organizing training activities and counselling services. Group approach is adopted for implementing the scheme, though individual beneficiaries are also assisted.

Women are given preference. In a five-year period, at least 30% of the poor from each block are to be helped to cross the poverty line in three years; with monthly income reaching beyond Rs. 2,000, after repayment to the bank. Four to five key activities are identified in each block; and the programme is implemented through activity clusters multiple credit rather than one time credit is made available on credit-cum-subsidy basis. SHG-bank linkage is pursued as part of the programme.

A one-time subsidy given is at 30% of project outlay, up to a maximum of Rs. 7,500; for SCs/STs at 50% of project outlay, up to a maximum of Rs. 10,000. For groups of SHGs, subsidy will be at 50% of project outlay, subject to a maximum of Rs. 1.25 lakh. There is no monetary limit on subsidy for irrigation projects. Subsidy will be back-ended.

Revolving fund up to Rs. 25,000 is given for each group at Rs. 1,000 per member in the initial stage. Apart from the Central scheme of SGSY, state governments also allocate matching grant equal to savings made by SHGs.

Women and weaker sections are the focus of poverty eradication effort under SGSY. 50% of the benefits under the programme are earmarked for SCs/STs, 40% for women, and 3% for disabled persons. Creation of infrastructure, skill development, capacity building, and promotion of marketing of goods are all part of the programme.

5. Swarna Jayanti Shahari Rozgar Yojana (SJSRY):

Under the SJSRY of the Union Ministry of Housing, Urban Employment and Poverty Alleviation, self-employment and wage employment opportunities are created for the urban unemployed or underemployed poor living below the poverty line. At the field level, it is implemented through municipalities and municipal corporations under the guidance of District Urban Development Agency (DUDA).

The scheme has two components- self-employment and wage employment. Self-employment segment covers individuals or persons in clusters; emphasis is on urban poor clusters. Self-employment programme focuses on establishment of micro enterprises and skill development.

Development of women and children (DWCUA) with focus on urban poor clusters, with special attention to women, SCs/STs/disabled persons, etc., is a part of the self-employment programme. There is no minimum educational qualification stipulated; however, the scheme does not apply to persons educated beyond 9th standard and the annual family income should not exceed Rs. 12,000 per annum at 1991-92 prices, and the candidates should be resident of the town for at least three years.

In the family, none should be a defaulter to any bank/ financial institution. Training of beneficiaries and others associated with the programme for up gradation and acquisition of vocational and entrepreneurial skills is an integral part of the programme.

For individual beneficiaries, the maximum unit outlay is Rs. 50,000. Subsidy provided is at 15% of the project outlay, up to a maximum of Rs. 7,500. Promoter’s contribution is envisaged at 5% of project outlay. When two or more persons join the venture, the sum of the permissible limits applicable to individuals will be applicable for the group.

For groups of at least ten women as part of DWCRA, subsidy is at 50% of project outlay, subject to a limit of Rs. 1.50 lakh. Revolving fund given to the group is up to Rs. 25,000, at Rs. 1,000 maximum per member. This is admissible after one year of the formation of the group. Loan from banks can be availed for projects of individuals or groups. This will include subsidy amount.

6. Rajiv Yuva Shakthi (RYS) – Empowerment of Youth:

This is a self-employment scheme of the Government of Andhra Pradesh, implemented through the Youth Services Department. The scheme covers rural and urban areas.

The beneficiaries are generally considered along the following criteria:

i. Group Approach – Individuals or groups of 2-5 members among the educated youth can be considered for assistance. Aspiring youngsters should have formed an association, operated for longer than three months; members get trained in motivation camps/youth leadership/entrepreneurship training programmes, etc. Youth with vocational training and qualification will be given preference. Women, SC, ST, physically handicapped, and ex- servicemen will be selected on priority basis.

ii. Age – The age of beneficiaries should be between 18 and 35 years.

iii. Focus of the Groups – Self-help and cooperation, participation in programmes of awakening and community development.

iv. Education – In a group, at least one member should have completed matriculation while others should be at least middle (eighth standard) pass. As individuals qualified for taking up petty businesses, one should be seventh pass or fail; for industries and services, one should be matriculation pass or fail. However, preference is given for candidates with vocational training.

v. Family Income – Family income of beneficiaries should not exceed Rs. 50,000 per annum; the programme is for assisting the poor youth in rural and urban areas.

vi. Residence Stipulation – Not specified.

vii. Organization – The group organizer is selected from the group. Group motivator is selected by the Youth Association. The Mandal Youth Empowerment officer coordinates the activities of associations and individual youth.

viii. Provisions of the Scheme- Activities are encouraged for setting up self-employment enterprises in industries, services, businesses, and agro-related activities. This is a credit- linked-subsidy scheme for individuals, and for groups of 2-5 youth. Subsidy at 20% of project outlay from Government of Andhra Pradesh is related to the nature of activity, for individuals or groups, and also in relation to project outlay.

Details are presented in Table 4.2. Promoter’s contribution at 10 per cent of project outlay is insisted upon. Urban wage employment programme is applicable to urban areas with population up to 5 lakh as per 2001 census. Material-labour ratio for works under this programme is to be maintained at 60:40.

Aims and Targets:

In a year, it is planned to cover the following:

(a) 25,000 youth (5,000 groups) with project outlay going up to Rs. 3-5 lakh per group for industries and services;

(b) 5,000 youth (individuals) with project outlay going up to Rs. 1 lakh for industries and services; and

The scheme will meet the training cost of unemployed youth or the cost of their education and training for self-employment.

Entrepreneur – Pros and Cons of Being an Entrepreneur

People are not born entrepreneurs. They choose to be entrepreneurs, rather than working as employees for a business.

Some of the more important advantages of being an entrepreneur are:

(i) As an entrepreneur, you may possibly earn large profits on your business, and therefore earn a much higher income than if you worked for another business.

(ii) You can be your own boss and run the business the way that you want.

(iii) Because you are in control, you do not need to fear being mistreated by a boss or being fired.

(iv) You have the satisfaction of working in a business that you created, and you will likely be more willing to work because you are directly rewarded for your work in the form of higher business profits.

Being an entrepreneur also has some disadvantages that should be considered:

(i) You may possibly incur large losses and could even lose your entire investment in the business.

(ii) Though you may be in control of the business, you have to ensure that the business functions properly. Being in control does not necessarily mean that you can skip work whenever you desire; the income you earn is tied to how well the business is managed on a daily basis.

(iii) Though, as the owner of a business, you will not be fired, you could still lose your source of income if the business fails.

Entrepreneur – Weaknesses

1. Do not have Skills for Entrepreneurs:

There are some basic skills you need to adopt as an entrepreneur to run any kind of business.

2. Lack of Sales and Marketing Skills:

When the Entrepreneurs are new to business then they do not know the tactics of the marketing. They are not aware about the skills that are required for the sales and marketing. Sales and marketing are the two most important skills you must have when you plan to start your own business. A business is nothing if it has no customers. The new small entrepreneurs try to sell without any plan and strategy.

You may have the fanciest computer with the latest graphics software, but if no one is knocking at your door to hire you as a graphic designer, then you better rethink why you are in business in the first place. To have revenues and profits, you first need to have customers. To get the customers you should know the different marketing skills to increase the sales.

Planning a business and executing the plan is a difficult process. Entrepreneurs plan their business; but when they actually implement it they find difficulty in reaching the target customers.

Reaching to the target customers involve many different methods. You need to understand the marketing concepts, customers’ behavior, their perception, their needs and their taste. You must have the knowledge of different marketing tools, their budget and effectiveness. Once you will have such knowledge you will be able to select the tools that your budget permits. Direct interaction with the customers will give you many ideas.

Entrepreneurs forget that they also need money for their marketing purpose. When they lack budget they do not do any planning instead they do business according to their convenience. It would be extremely helpful if you possess excellent written and oral communication skills to help you sell your products and services (more so if you are a solo entrepreneur who will be doing everything by yourself).

You can also hire sales executives who are good in communication skills, body language, negotiations, convincing and personality. You need to interact with the people to tell them about your business and your specialty. You need to write ads, press releases and story ideas about your business. Starting a business is a time to get out of your timid self and begin to aggressively market your venture. That’s the only way you can succeed.

3. Mistrust:

The desire for control leads them to show strong distrust in people who work for them. They do not trust anyone in the business. They do not have any trust on the employees nor on the business partners etc. They think that the others may take undue advantages of their trust.

They are afraid and remain doubtful. If they are too paranoid, they become easy praise for investors, partners and clients who adapt it to manipulate them to gain control. Yet, this trait is a double edged sword. It can make them more alert to the people in the surrounding who might attempt to con them.

Don’t you see it all around you – why bosses in small companies tend to be misers compared to those in big companies? They are afraid that when they spend on their employees, they will be taken advantage of. So, being trapped in the state of distrust, their first defence is to ensure that they exploit a lot more from employees.

4. Financial Know-How:

You are in business to make money. Therefore, the most important skill you must have is the ability to handle money well. This includes knowing the sources of money, proper utilization of money, spend when it is needed, take decision on new vs. old purchase and buy vs. lease. You should know the proper manipulation of the money.

The entrepreneurs may not know where to use credit and where to use debit. They do not know how much they have to invest? When do they have to purchase the equipments? When do they have to take equipments on rent? How much to carry on hand. Entrepreneurs need to think about it. You also need to identify the best pricing structure for your business in order to get the best kind of return for your products or services.

Only having money is not enough for the success of business. Look at the failed dot-coms with funding of as much as 100 million rupees. Even if they are awash with cash, they still end up as a failure because they were not able to manage their money well. The entrepreneurs must know the better combination of the credit and debit. If you have learned the tactics of managing the money then you know better how to run the business in fluctuating market.

The important thing is to always focus on the bottom-line. You should have a record of every spending. Always ask yourself – “How much will this contribute to my bottom line?” If it will not give your business anything in return financially, better think twice before opening your wallet.

5. Ego:

Every entrepreneur has an ego and usually it is a strong one. If you don’t have an ego, it’s hard to believe that you are an entrepreneur. Ego is good but it should not hurt others in the business. That’s the unfortunate reality because of the many characteristics which an entrepreneur possesses. They should not be the egoistic person; they are in business where they will need the help of number of persons to run the business. They cannot run business without anyone’s help. However, there are varying degrees of ego in every entrepreneur.

Sometimes, personal ego can be detrimental to the growth of the company. Every person wants respect from others, if you will not respect others or treat them in a wrong way then you may not get proper support that you want from them. It is always important for the entrepreneur to think about how his or her startup as an organization is greater than them. They should give value to each person who is helping them to grow the business. The other is that the entrepreneur has to learn humility through the hard way.

6. Decline in Self-Motivation Skills:

Entrepreneurs are always in the illusion that now they are the boss and they do not have to do much; they just hire the people and they will do everything in the business. They forget that in the small business they cannot sit relaxed. Market is full of competition in such case the relaxation will be costly for the entrepreneurs. As an entrepreneur, you do not have the luxury of bosses and bureaucracy to tell you what needs to be done.

Everything rests on your shoulder – from thinking where to get money to fund the business, to develop the product, to determine how to reach the customer and so on. You need to be smart enough to know when you need to go ahead and when to stop. The self-motivation is must in the business. Entrepreneurs start their business with zeal but after sometime they become lazy. They also become lazy when business does well in the market. They become the satisfied ones.

If you want to grow your business then you must be an initiator with clear business objectives. You must have a belief on yourself. You must be confident enough to implement your ideas. If you will hesitate or fear then you can never sell your ideas to the customers even if your ideas are best. More importantly, you must be willing to focus your energy and work hard towards each and every step that will make your enterprise a success.

The business is yours if you will not take the efforts then how you will expect that others will work hard for your business. You should not be the lazy one but the active one. You must have extra drive and commitment to make sure that you are taking the necessary steps to make your dream of a successful business a reality.

7. Control Freak:

Most entrepreneurs desire control. Entrepreneurs are people who want to make a difference in other people’s lives. The motivation to create something new and innovative or redefine how people conceive the traditional markets bring them not only creativity but also the unfortunate trait of possibly being a control freak. Their obsession with control affects their ability to move or delegate demonstrates how badly at times they get along with other people.

They do not treat the others in a good manner. If the entrepreneur is a nonconformist in the first place, they will have serious difficulty in dealing with issues on dominance and submission and worst, they are suspicious of authority. They should definitely have a control over the business but their behavior should not be the worst one. Most entrepreneurs want to create their own environment. They do not want to be at the mercy of others, which makes them very intolerant of incompetency.

8. Time Management Skills:

Time has an important role in business. If properly managed then it can give you success and if improperly managed then your business will not survive. You must have a time table for your business activities. When you wake up in the morning, you must have a clear idea what tasks you are going to do today.

You should have perfect planning of the day and the record of how much you have completed the work. The new entrepreneurs cannot give their much time because they have to do everything in their business. They have a little budget so they take care of all the work but here they face the problem of riot giving the time to the whole business. Some issues in the business need quick settlement.

If those issues are not given proper time then business suffers. Especially if you are running a one-person operation, you must design the whole day in such a manner so that from morning to evening you should be able to do multi-tasks in sequence. In the morning type document or send e-mails, in afternoon handle all marketing activities and in evening do bookkeeping.

In between you may have to go to the banks for depositing and withdrawing money. So plan it and select those banks that are on your way. Planning your time is the best way to perform the tasks sequentially and on time. You simply have to know how to manage time and prioritize your tasks.

9. Administration Skills:

Most of the new entrepreneurs do not have good administration skills. They face many problems without any solutions. They properly do not know the exact solutions; sometimes they even don’t know that there are problems in the business. They are not capable of handling each and every task. They need a proper training to get the skills of the administration. They should develop themselves in terms of billing, printing invoices, collecting payments and managing receivables. If you can take the assistance of paid assistant then it will help you a lot. Even if you lack knowledge in administration work then select such an assistant who are the experienced ones and can handle the burden of administrative work. However, for new small entrepreneurs it is not easy to hire paid assistant.

They already run out of money so it becomes their distant dream. Stalling a business is never easy, even if you have the perfect background and possess all the above skills. Having all the needed skills and qualities will not even ensure your success. But having these basic skills will, at least, lessen the pain of the start-up process, giving you greater chance in seeing your business grow and prosper.

10. Get Conned Easily:

Most young entrepreneurs will begin with idealism and fervor and work on passion to keep their startup going. Being young and brash, they usually let both successes and failures overwhelm them. Their lack of experience with the real world makes them naive about dealing with people. There are many examples in how human error could occur.

The first example is that they may not be sharp enough to see that the supplier makes more money out of them by delivering lesser goods. Another example involves their business partners are not delivering what they promised. Sometimes, these awkward situations can land young entrepreneurs into trouble.