Unit 3
Sustainability of Entrepreneurship
Entrepreneurship is a prominent and sustainable source of livelihood and self-employment in an economy. It also contributes to the society and economy with their innovative ideas. In order to build a favourable entrepreneurial ecosystem, entrepreneurs should be provided with a platform where they can :-
a) Come up with Innovative ideas ( i.e. get stimulated)
b) Get adequate assistance ( i.e. get support)
c) Ensure their survival in the long run (i.e. be sustainable)
These three elements are entrepreneurship life cycle depicted in Figure 1
Figure 1: Entrepreneurship life cycle
It refers to the act of identifying & motivating individuals, to come up with innovative ideas and commercialise them to solve the problem of the society and economy and also create changes for the betterment of the society and economy as a whole. Different simulation system includes-
a) Public simulation system initiated by the government. It includes the approaches like tax holidays over income, reduction in interest rate on loan, abolition of monopoly from the market, financial assistance to their projects etc.
b) Private simulation system initiated by the business persons through crowd funding, angel investment, encouragement for intrapreneurship etc.
Figure 2: Simulation approaches
2. Support:
During the process of converting ideas into business ventures entrepreneurs need financial, marketing and technical support which may be provided by public system and private system. The figure 2 shows the different types of support system-
Figure 3: Support system
a) Financial Support :
An entrepreneur requires funds for stating a new venture & for sustaining it in the long run. Additional funds are required when an existing enterprise plans for expansion & / or diversification. Any organisation requires funds for 2 purposes
1) For procurement of Assets
2) For day to day running of the org
Funds are available from banks, financial investors, shareholders, angel investors, venture capitalist etc.
b) Marketing support:
New start-ups also look for marketing assistance to market and sell their products/ services. Initiatives are taken by both public and private system enhance marketing skills, improving marketing capabilities and for encouragement of MSMEs.
c) Technical support :
The entrepreneurs also need technical support like machines, devices, application software to manufacture products/provide services and marketing of their products and services.
3. Sustainability:
Sustainability refers to the act of continuous, efficient & profitable maintenance of the activities of a venture over the long period. Activities for sustaining Entrepreneurship are–
a) Helping in modernization or substitution of existing products
b) Facilitating quality testing & quality improvement mechanism at low cost.
c) Creating forums for entrepreneurs to share their mutual problems.
Key takeaways-
a) Entrepreneurship is a prominent and sustainable source of livelihood and self-employment in an economy. It also contributes to the society and economy with their innovative ideas.
An entrepreneur/newly set up business venture look for support of finance, marketing, technology and marketing accommodation at the initial stage and also for modernisation, expansion and diversification of business.
a) Requirement, availability and access to finance:
An entrepreneur requires funds for stating a new venture & for sustaining it in the long run. Additional funds are required when an existing enterprise plans for expansion & / or diversification. Any organisation requires funds for 2 purposes-
a) For procurement of Assets.
b) For day to day running of the org.
Such funds are available from-
1) Institutional sources
a) Commercial banks
b) NBFIs
c) Angel investors
d) Shareholders
e) venture capitalist
f) Govt. & Govt. institutions
2) Non- institutional sources-
a) Relatives
b) Friends
c) Money landers
d) Indigenous bankers
The figure 3 shows the requirement and availability of funds for entrepreneurs-
Figure 3: Requirement and sources of funds
b) Requirement, availability and access to marketing assistance
There is requirement of marketing assistance for entrepreneur and new business venture because of lack of marketing knowledge and also to face competition in the market. Due to availability of similar products in the market it become very necessary for producers/service providers to position and promote their products among the target market through efficient marketing strategy. Some of the reasons for requirement of marketing assistance are-
a) Availability of similar products in the market
b) Survival in the long run
c) Attract the target market
d) Increase the market share
The measures taken for the availability and access to marketing assistance are-
a) Enhance marketing skills of entrepreneurs by imparting skills on packaging, trade mark, promotion etc.
b) Improving Marketing Capabilities
c) Updating Entrepreneurs about current scenario
d) Encourage MSME through implementation of entrepreneurship promotion schemes.
e) Conduct fairs and exhibitions for the products of entrepreneurs.
The figure 4 shows the requirement and availability of market assistance-
Figure 4: Requirement and availability of market assistance
c) Requirement, availability and access to technology
The entrepreneurs also need technical support like machines, devices, application software to manufacture products/provide services and marketing of their products and services. The figure 5 shows the technical support for entrepreneurs-
Figure 5: Technical support for entrepreneurs
d) Requirement, availability and access to industrial accommodation
Industrial accommodation is required to provide support to the small industries/entrepreneurs for their growth and development. It facilitates to small and local entrepreneurs through tax benefit, subsidised and concessional loan, export promotion measures, etc.
The figure 5 shows industrial accommodation measures for entrepreneurs-
Figure 5: Industrial accommodation measures
Key takeaways-
1) An entrepreneur/newly set up business venture look for support of finance, marketing, technology and marketing accommodation at the initial stage and also for modernisation, expansion and diversification of business.
Industry Association
An association that is formed to support & protect the rights of a particular Industry & the persons who are associated with that Industry. E.g. Bus owners association, Chamber of commerce etc.
Role and functions
Self – help groups
It is a voluntary association of people, preferably from the same socio – economic background. They come together for solving their common problems through self – help & mutual help.
Role and functions
Business incubators
It is an organization, which is designed to stimulate, support & enhance the growth & success of Entrepreneurial ventures by providing resources & services.
Angel investors
Angel Investors are usually high net worth individuals who invest their personal wealth in small or medium scale business start- ups in exchange for an ownership stake in the organization.
Venture capital
Venture capital is an equity investment fund where the venture capitalists finance the highly risky and sophisticated technology projects through equity financing. It promotes and supports the projects until it started to earn profit.
Role and functions
Private equity fund
It is a collective investment scheme used for making investment in different equities and debt instrument for 5-10 years. Such funds are not traded in stock market. Different types o are-
1) Venture capital
2) Buyout: It is designed to invest in a larger business to generate favourable and sizable returns.
3) Real estate: Such funds are invested in ownership of various real estate properties.
4) Growth funds: It invests in mature corporates with successful business.
Role and functions are same as venture capital functions.
Key takeaways-
1) An association that is formed to support & protect the rights of a particular Industry & the persons who are associated with that Industry.
2) It is a voluntary association of people, preferably from the same socio – economic background. They come together for solving their common problems through self – help & mutual help.
3) It is an organization, which is designed to stimulate, support & enhance the growth & success of Entrepreneurial ventures by providing resources & services.
4) It is a collective investment scheme used for making investment in different equities and debt instrument for 5-10 years.
References:
1.Enterpreneurial Development by S.S. Khanka
2.Entrepreneurship Development and Small Business Enterprises by M. Charantimath
