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Entrepreneur Competencies

Competencies Competency is composed of knowledge, skills,

abilities, traits and other characteristics for successful job performance. An entrepreneur is expected to interact with these environmental forces which require him to be highly competent in different dimensions like intellectual, attitudinal, behavioral, technical, and managerial aspects.

Need for Entrepreneur Competencies Entrepreneurial competencies are the skills necessary

for an entrepreneur to venture into an enterprise Organize and manage an enterprise competently to realize the goal for which the enterprise is established.

COMPONENTS OF ENTREPRENEURIAL COMPETENCIES

ATTITUDINAL COMPETENCY ATTRIBUTES An attitude is a hypothetical construct that represents an individual’s degree of like or dislike for something. Attitudes are generally positive or negative views of a person, place, thing, or event.  Attitudes are judgments of an individual. Behaviour in a given situation can be viewed as a function of the individual’s attitude towards the situation.

Self Confidence Self-confidence is an essential trait in an entrepreneur because he is regularly called upon to perform tasks and make decisions that require great amounts of faith and belief in himself to achieve the predetermined goals.

Self Esteem Self-esteem of an entrepreneur represents his ability to develop healthy confidence and respect for himself. Dealing with Failures Entrepreneurship is about getting up whenever the business fails, and learning from that failure. An entrepreneur believes that failure is part of the entrepreneurial process, and often without it, success would not be possible.

Tolerance for Ambiguity In the entrepreneurial process tolerance for ambiguity refers to the ability of an entrepreneur to perceive ambiguous situation as desirable, challenging, and interesting.

Concern for high quality  An entrepreneur has a concern for high quality of his products and services to meet or surpass existing standards of excellence in a faster, better and cheaply way.

Locus of Control (LOC) Locus of control is the system of belief of an individual who perceives the outcome of an event as being either within or beyond his personal control. Entrepreneurs tend to believe in their own ability to control the outcomes to their efforts by influencing the existing environment, rather than leave everything to luck.

Behavioral competency BEHAVIORAL COMPETENCY ATTRIBUTES of

an entrepreneur refers to the underlying charecteristics having casual relationship with effective or superior performances in the process of carrying on his business activities.

Initiatives Initiative of an entrepreneur refers to his behavior with a preference for taking action on different responsibilities or assignments. Sees and Acting on Opportunities Sees and acting on opportunities refers to the unique entrepreneurial behaviour which helps him to be alert to information and ability to process it in order to identify and recognize the potential business opportunities even before his competitor.

Persistence Persistence of an entrepreneur denotes the ability which keeps him constantly motivated even when he is confronted by obstacles and willing to keep trying when things go wrong.

Assertiveness Assertiveness of an entrepreneur is about his rights or point of view without either aggressively threatening the rights of others (assuming a position of dominance) or submissively permitting others to ignore.

Need for achievement Successful entrepreneurs are characterised by a need for achievement which motivates them to take up responsibilities for finding solutions to problems. Need for autonomy  The need for autonomy of an entrepreneur is characterized by a drive to control and influence others, a need to win arguments, a need to persuade and prevail.

Risk-taking Entrepreneurs are essentially persons who take decisions under uncertainty and therefore they are willing to bear risk. Innovation Innovation refers to characteristic of an individual who has interest and desire to seek changes in techniques and ready to introduce such changes into his operations

Creativity An entrepreneur is said to be creative when he is able to identify a gap in the market and think up a product or service to meet that gap. Creativity of an entrepreneur also implies the ability to do old thinks in a new way or able to give new solutions.

MANAGERIAL COMPETENCY ATTRIBUTES Managerial Competency of an entrepreneur is the

ability to direct his staff and define the expected outcomes clearly and finally to get the things done at the best and cheapest ways and means. Information seeking An entrepreneur has an urge to look for the required information in order to make an informed decision, for example, selecting, starting and successfully managing the desired business

Systematic planning An entrepreneur is expected to have systematic planning which will help him to prepare an action plan for every area of operation in order to achieve the pre determined goals. Problem solving Problem solving refers to the application of appropriate knowledge and skills in order to solve a problem arising while carrying on the business.

Persuasion Persuasion in entrepreneurship refers to the ability of entrepreneurs to link, convince and influence other individuals, groups, agencies, creditors, debtors, customers and even competitors in order to create a contact and maintain good rapport.

Goal setting & Perseverance Goal setting refers to the ability of an entrepreneur to set clear and specific goals and objectives.  Successful entrepreneurs are able to achieve great things only by overcoming the obstacles that stand in their way. Therefore they need to have perseverance which implies commitment, hard work, and patience, endurance apart from being able to bear difficulties calmly and without complaint.

Communication Skill Communication skill refers to the ability of an

entrepreneur to transfer ideas, plans, policies and programmes to employees, debtors, creditors, customers and everyone who is connected with the business in order to inform, influence and to express his feelings.

Technical knowledge An entrepreneur needs to address the rapid technical

changes in the industry. Higher levels of technology must be introduced in the production methods in order to achieve productivity demands.

Social skill Social skill of entrepreneurs include social perception

(the ability to perceive others accurately), expressiveness (the ability to express feelings and reactions clearly and openly), impression management (skill in making favorable first impressions on others), and social adaptability (proficiency in adapting one’s actions to current social contexts) in the process of managing his business.

Other Competencies Opportunity competencies : Competencies related to recognizing and developing

market opportunities through various means . Relationship competencies : Competencies related to person-to-person or individualto-group-based interactions, e.g., building a context of cooperation and trust, using contacts and connections, persuasive ability, communication and interpersonal skill . Conceptual competencies : Competencies related to different conceptual abilities, which are reflected in the behaviors of the entrepreneur, e.g., decision skills, absorbing and understanding complex information, and risk-taking, and innovativeness . Organizing competencies : Competencies related to the organization of different internal external human, physical, financial and technological resources, including team-building, leading employees, training, and controlling Strategic competencies : Competencies related to setting, evaluating and implementing the strategies of the firm. Commitment competencies : Competencies that drive the entrepreneur to move ahead with the business.

Government Support to Entrepreneurs An entrepreneur requires a continuous flow of funds not

only for setting up of his/ her business, but also for successful operation as well as regular up gradation/ modernization of the industrial unit. To meet this requirement, the Government (both at the Central and State level) has been undertaking several steps like setting up of banks and financial institutions; formulating various policies and schemes, etc. All such measures are specifically focused towards the promotion and development of small and medium enterprises.

The government of India has been taking active steps to promote

entrepreneurship in various industry & service sectors. It has declared several policy measures and is implementing schemes and programmes to enhance the global competitiveness of small enterprises across the country. The Ministry of Micro, Small and Medium Enterprises is the nodal Ministry for formulation of policies, programmes and schemes, their implementation and related co- ordination, for the promotion and development of small scale industries in India. The role of the Ministry is to assist the States in their efforts for the growth of the small scale sector, by enhancing their competitiveness in an increasingly liberalized economy. It is assisted by an attached office and two public sector enterprise, namely:

Micro, Small and Medium Enterprises Development

Organization (MSME-DO) National Small Industries Corporation Ltd (NSIC) Khadi and Village Industries Commission (KVIC) Coir Board

Micro, Small and Medium Enterprises- Development

Organization (MSME-DO). It is the apex body for assisting the Government in formulating, coordinating, implementing and monitoring policies and programmes for micro, small and medium enterprises (MSMEs) in the country. MSME-DO provides a comprehensive range of common facilities, technology support services, marketing assistance, entrepreneurial development support, etc. Coir Board :- is a statutory body, established under the Coir Industry Act, 1953, for the promotion and development of coir industry in India as well as for uplifting the living conditions of the workers engaged in this industry.

National Small Industries Corporation Ltd (NSIC) :-

was established by the Government with a view to promoting, aiding and fostering the growth of micro, small and medium enterprises in the country, with a focus on commercial aspect of their operations. It implements several schemes to help the MSMEs in the areas of raw material procurement, product marketing, credit rating, acquisition of technologies, adoption of improved management practices, etc.

Khadi and Village Industries Commission (KVIC) :-

established under the Khadi and Village Industries Commission Act, 1956, as a statutory organisation engaged in promotion and development of khadi and village industries for providing employment opportunities in the rural areas

Role of Government to support Entrepreneurship (a) To provide information on regulations, standards, taxation, customs duties, marketing issues; (b) To advise on business planning, marketing and accountancy, quality control and assurance; (c) To create incubator units providing the space and infrastructure for business beginners and innovative companies, and helping them to solve technological problems, and to search for know-how and promote innovation; and

(d) To help in looking for partners, in order to

stimulate entrepreneurship and improve the business environment for small enterprise.

Trainings There are a number of Government organizations as

well as NGOs who conduct EDPs and MDPs. These EDPs and MDPs and are conducted by MSME's, NIESBUD, NSIC, IIE, NISIET, Entrepreneurship Development Institutes and other state government developmental agencies.

Marketing Assistance There are Governmental and non-governmental

specialized agencies which provide marketing assistance. Besides promotion of MSME products through exhibitions, NSIC directly market the MSME produce in the domestic and overseas market. NSIC also manages a single point registration scheme for manufacturers for Govt. purchase. Units registered under this scheme get the benefits of free tender documents and exemption from earnest money deposit and performance guarantee.

Promotional Schemes Government accords the highest preference to

development of MSME by framing and implementing suitable policies and promotional schemes.

Besides providing developed land and sheds to the entrepreneurs on actual cost basis with appropriate infrastructure, special schemes have been designed for specific purposes like quality upgradation, common facilities, entrepreneurship development and consultancy services at nominal charges.

Concession on Excise Duty MSME units with a turnover of Rs. 1 crore or less per

year have been exempted from payment of Excise Duty. Moreover there is a general scheme of excise exemption for MSME brought out by the Ministry of Finance which covers most of the items. Under this, units having turnover of less than Rs. 3 crore are eligible for concessional rate of Excise Duty. Moreover, there is an exemption from Excise Duty for MSME units producing branded goods in rural areas

Credit Facility to MSME Credit to micro, small and medium scale sector has been covered

under priority sector lending by banks. Small Industries Development Bank of India (SIDBI) has been established as the apex institution for financing the MSME. Specific schemes have been designed for implementation through SIDBI, SFCs, Scheduled Banks, SIDCs and NSIC etc. Loans upto Rs. 5 lakhs are made available by the banks without insisting on collaterals. Further Credit Guarantee Fund for micro, small and medium enterprises has been set up to provide guarantee for loans to MSME up to Rs. 25 lakhs extended by Commercial Banks and some Regional Rural Bank.

All the State Governments provide technical and other support services to

Policies and Schemes for Promotion of MSME Implemented by State Governments

small units through their Directorates of Industries, and District Industries Centres. Although the details of the scheme vary from state to state, the following are the common areas of support. (i) Development and management of industrial estates (ii) Suspension/deferment of Sales Tax (iii) Power subsidies (iv) Capital investment subsidies for new units set up in a particular district (v) Seed Capital/Margin Money Assistance Scheme (vi) Priority in allotment of power connection, water connection. (vii) Consultancy and technical support Government of India runs a scheme for giving National Awards to micro, small and medium scale entrepreneurs providing quality products in 11 selected industry groups of consumer interest. The winners are given trophy, certificate and a cash price of Rs. 25000/- each.

District Industries Center The concept of District Industries Center came during

the year 1977, when Government of India announced the new Industrial policy on 23.12.1977. It laid special stress on the development and promotion of small scale, village and cottage industries. In each district, one agency was created to deal with all requirements of small and village industries.

Up to1991, 422 DICs were in operation in the country,

almost one for each district. These DICs have assisted more than 1.5 lakh unit generating employment for more than 10.3 lakh persons. Till March 31st 1998, 422district industries centres(DICs) have been set up covering 431 districts of country leaving out the metropolitan cities and some new districts.

Objective of DIC  To develop entrepreneur skills of people. To motivate for self employment. To providing all the necessary facility in one roof. To reduce regional imbalance of development. To Cheek in migration

Functions of DIC Infrastructure Assistance to Entrepreneurs. Recommendation for loans from financial Institutions &

banks. Implementation of Incentives Scheme Inspection and recommendation of Investment Employment Generation Programmes Special Component Plan (SCP) and Tribal Sub Plan (TSP)Implementation and Monitoring of Special Component Plan (SCP) and Tribal Sub Plan (TSP) schemes to provide assistance to the SC and ST; Entrepreneurship development and Awareness

SISI : Small Industries Service Institute  The small Industries Service Institute (SISI) are the

field offices of Small Industries Development Organisation (SIDO), Ministry of Small Scale Industries, Govt. of India, set up for the promotion and development of Small Scale Industries in the State in the early fifties.  This Institute provides support / services to the State Government as well as co-ordinates various activities at the state level for promotion and development of small scale industries.

Functions of SISI To assist existing and prospective entrepreneurs through technical and managerial

counseling such as help in selecting the appropriate machinery and equipment, adoption of recognized standards of testing, quality performance etc; Conducting EDPs all over the country; To advise the Central and State governments on policy matters relating to small industry development; To assist in testing of raw materials and products of SSIs, their inspection and quality control; To provide market information to the SISI’s; To recommend SSI’s for financial assistance from financial institutions; To enlist entrepreneurs for partition in Government stores purchase programme; Conduct economic and technical surveys and prepare techno-economic feasible reports for selected areas and industries. Identify the potential for ancillary development through sub-contract exchanges; Organize seminars, Workshops and Industries Clinics for the benefit of entrepreneurs.

EDII The Entrepreneurship Development Institute of India

(EDI), an autonomous body and not-for-profit institution, set up in 1983, is sponsored by apex financial institutions, namely the IDBI Bank Ltd, IFCI Ltd. ICICI Ltd and State Bank of India (SBI). The Institute is registered under the Societies Registration Act 1860 and the Public Trust Act 1950. EDI, an autonomous institution set up in 1983 as a pioneering institute for Entrepreneurship Development and Training in India and around the globe.

The driving values at the Institute are innovation,

experimentation, risk-taking, inclusiveness, thinking out of the box and to offer need based & socially relevant solutions. EDI conducts several training programmes – both national and international, implements projects for the state governments, central government and international organisations, and offers two unique Post Graduate Programmes under its Centre for Entrepreneurship Education & Research.

NEISBUD The National Institute for Entrepreneurship and Small

Business Development is a premier organisation of Ministry of Micro, Small and Medium Enterprises engaged in training, consultancy, research, etc. in order to promote entrepreneurship. The major activities of the Institute are Training of Trainers, Management Development Programme, Entrepreneurshipcum-Skill Development Programme, Entrepreneurship Development Programme and Cluster Intervention. The Institute has trained more than 2.98 lakh trainees including 3,000 persons from more than 125 countries till 31st July, 2014

Objectives of NEISBUD NIESBUD is an apex body established by Ministry of Micro, Small & Medium Enterprises,

Government of India. The Objectives are as follows:To evolve standardised materials and processes for selection, training, support and sustenance of entrepreneurs, potential and existing. To help/support and affiliate institutions/organisations in carrying out training and other entrepreneurship development related activities. To serve as an apex national level resource institute for accelerating the process of entrepreneurship development ensuring its impact across the country and among all strata of the society. To provide vital information and support to trainers,promoters and entrepreneurs by organising research and documentation activities relevant to entrepreneurship development To train trainers, promoters and consultants in various areas of entrepreneurship development To offer consultancy nationally/internationally for promotion of entrepreneurship and small business development. To provide national/international forums for interaction and exchange of experiences helpful for policy formulation and modification at various levels. To share international experience and expertise in entrepreneurship development. To share experience and expertise in entrepreneurship development across national frontiers.

NEDB Objectives : The main objective of the National Entrepreneurship Development Board (NEDB) Scheme is promotion of entrepreneurship for encouraging self-employment in small scale industries and small business. The scheme covers the following activities :(i) To identify and remove entry barriers for potential entrepreneurs (first generation and new entrepreneurs) including study on entrepreneurship development. (ii) To focus on existing entrepreneurs in micro, tiny and small sector and identify and remove constraints to survivals, growth and continuously improve performance. (iii) To facilitate the consolidation, growth and diversification of existing entrepreneurial venture in all possible ways. (iv) To support skill upgradation and renewal of learning processes among practising entrepreneurs and managers of micro, tiny, small and medium enterprises. (v) To sensitise to support agencies in the area of entrepreneurship about the current requirement of growth. (vi) To act as catalyst to institutionalise entrepreneurship development by supporting and strengthening state level institutions for entrepreneurship development as most entrepreneurship related activities take place at the grass root level and removing various constraints to their effective functioning. (vii) Setting up of incubators by entrepreneurship development institutions and other organisations devoted to the promotion of entrepreneurship development.

Sources of finance Long Term: The sources of long-term finance refer to the

institutions or agencies from, or through which finance for a long period can be procured. (a) Capital Market (b) Special Financial Institutions (c) Mutual Funds (d) Leasing Companies (e) Foreign Sources (f) Retained Earnings Short Term :

Capital Market Capital market refers to the organisation and the mechanism through which the companies, other institutions and the government raise long-term funds. 1. Equity Capital (Issue of Ordinary Shares)  The company sells shares in the business to raise money  Dividends may be paid to the shareholders out of the profits each

year  No interest has to be paid on the money raised  Each new shareholder has a say in the running of the company

Special Financial Institution(SFI) for long term

loans

The loan and interest is paid back in equal instalments

over the length of the loan A number of special financial institutions have been

set up by the central and state governments to provide long-term finance to the business organisations and subscribe to their share and debentures

Industrial Finance Corporation of India (IFCI),

Industrial Investment Bank of India (IIBI),Industrial Credit and Investment Corporation of India (ICICI), Industrial Development Bank of India (IDBI), Infrastructure Development Finance Company Ltd. (IDFC),Small Industries Development Bank of India (SIDBI)etc

Leasing  A firm agrees with a financial institution to pay an agreed sum   



of money each month in eturn for the use of an asset The firm never owns the asset The firm may end up paying more in the long term than the asset is worth Leasing facility is usually provided through the mediation of leasing companies who buys plant and machineries from manufacturers and rent it for specified time period. For this purpose a proper lease agreement is made between the lessor (leasing company) and lessee (the company hiring the asset).

Foreign Sources Foreign Sources also play an important part in

meeting the long-term financial needs of the business in India. These usually take the form of (1) external borrowings; (2)foreign investments and; (3) deposits from NRIs.