Skills required by a person to succeed as an entrepreneur are called entrepreneurial skills. An entrepreneur is a person who starts a business with the aim of providing a product or service to the people and making a profit in return. The act of starting such a business is called entrepreneurship.
You cannot really enjoy (and understand!) the topics covered in Class 10 syllabus if you don’t remember the topics covered in Class 9. That is why I have included everything covered in both classes 9 and 10 in this ultimate guide on entrepreneurial skills.
But don’t worry, if you want to skip straight to Class 10 topics, click here.
At the end of this guide, you will be able to
- Explain different types of businesses
- Discuss about common businesses around them
- Describe entrepreneurship characteristics
- Identify a successful entrepreneur
- Understand the importance of environment in economy
- Discuss the relationship between entrepreneurs and society
- Challenge the myths around entrepreneurship
- Understand the need for sustainable development
Table of contents
Types of businesses
Any organisation that uses economic resources to provide services or product to any person or organisation is a business. Business is a commercial activity and exchange of money or goods must take place between the parties involved.
When you look around you can see different types of businesses running. For example,
- The stationary shop from where you buy your books, copies, pencils or pens
- The grocery shop where your mother goes to buy the groceries
- The milk booth from where you get milk or other milk products
- The restaurant where you go to celebrate your birthday
All these are businesses but of very different types. Let’s see what the basic types of business are.
Service business
An individual or an organisation providing professional expertise, advice, guidance or any such thing that has no physical form is called a service business. Let’s take some examples to understand this. If your fan stops working, you call the electrician, who repairs it. The electrician here is providing you a service and his business is a service business.
When you are unwell you go to a doctor. Here also the doctor is providing you with healthcare services. The doctor is in service business. So are the hospitals, banks, shops, colleges and insurance offices around you.
The cost of service that must be paid includes value of the service provider’s skill and time as well as cost of any material, if used.
Manufacturing business
Unlike the service business, manufacturing business provides you with a tangible product that you can see. Manufacturing business units purchase goods and process it to convert into a new product. The items used to make the product are called raw materials. Again, let’s take some examples to understand this.
Garment manufacturing unit purchases cloth from handlooms or textile factories and stitches them into finished products like shirts, trousers, dresses, etc. These products are then sold to the customers. The garment manufacturing unit is a manufacturing business.
A glass factory would purchase glass and then convert them into crockery items like cups, glasses, dinner set, etc. and sell them to the customers. This is also a manufacturing business.
The cost of a product includes not only the raw material but also infrastructure cost, labour charges, cost of marketing, etc.
Merchandising business
The goods that are manufactured at manufacturing units are usually not sold to the customers directly. The business owners are often expert at manufacturing the goods but not necessarily at selling them. So, some businesses source the goods from manufacturers and sell it to customers. They are in merchandising business or retail business. They are often called buy and sell business because they are buying a product and then selling it without adding any value to it.
You might be wondering why the retailers are in business and what the source of their revenue is. Well, they earn by selling the product at a price higher than their purchase price.
Hybrid businesses
As the name suggests, hybrid businesses are those businesses that cannot be strictly put into any of the three categories discussed above. Let’s take an example to understand this.
You must have visited a restaurant to have lunch or dinner with your friends or family. Can you tell what type of business is a restaurant?
To answer this, we need to closely examine what a restaurant does.
A restaurant gets groceries from a shop and makes food out of it. That is manufacturing. The restaurant also sells readymade products like cold drinks. That is merchandising. It provides service to the customer according to their requirements. That is service business.
You can see that a restaurant does a bit of everything that we have discussed till now. So, it is a hybrid business.
However, for commercial and legal purposes all businesses must be categorised into one single business type. In our case, restaurant is mainly providing dining services to its customers. Whatever it does, including manufacturing and merchandising, is for providing that service. Hence restaurant is a service business.
What is Entrepreneurship
The act of planning, launching and operating a business that solves customer problems innovatively while also making profits is called entrepreneurship. It involves multiple activities such as
- Coming up with ideas
- Planning
- Managing funds
- Designing business processes
- Launching the business
- Running or operating the business
- Leadership
A person who starts a business to solve customer problems in an innovative way and make profits is an entrepreneur. To begin with, not everybody wants to make a profit. They have a great idea and feel that others will benefit out of it. They start a business and become entrepreneurs.
Characteristics of entrepreneurship
Here are some characteristics of entrepreneurship:
- Identifying customer needs
- Doing something to solve the need in a way that has not been done before
- Employing new and better ways to solve existing problems
- Taking risks
Rewards of entrepreneurship
Entrepreneurship has its risks. What if the idea does not click? What if there aren’t enough customers for the business idea? What if my customers go to competitors? Do I have the right skills and resources to execute this? What if there are bottlenecks that were not anticipated? But entrepreneurship has its own rewards as well, which attracts people. Here are some of those rewards:
- Creating jobs – If there are no businesses there would be no jobs. Entrepreneurs are required to start businesses and create jobs for others. They are risk takers who don’t mind putting their whole life and skill on fire so that they may be able to generate profit and help others on the way.
- Bringing about change – Many entrepreneurs start a business so that they may bring about a social and economic change in the society. Jamshedji Tata wanted to build an iron and steel plant in India so that India could become a producer rather than the consumer of steel. Without his vision India would not have been the steel superpower that it is today.
- Giving back to society – You must have been told time and again that man is a social animal. What does it mean exactly? It means that human beings cannot live without the society. The society provides them with the environment to grow into a complete human being. Therefore, it becomes the responsibility of that person to give back to society when they are able to. Once the entrepreneurs are successful, i.e. they are able to generate profit, they usually take up social causes like taking care of the elderly, educating children, setting up healthcare units, etc.
Why should you become an entrepreneur?
On the face of it, being an entrepreneur is not easy. You have learnt about the risks involved. Besides the risks, there is lots of hard work required to start and operate a business. So why should you become an entrepreneur? Well, here are some reasons for you to consider:
- You do not need to depend on anyone else for earning a living. In fact, you can provide others a means of livelihood.
- You can do things the way you think to be right. You might make mistakes but you will learn from them and you can do other things that are right.
- You can have a life of your own. When you work for others you have to work according to their requirements and time. But if you work for yourself you are your own boss and you can decide your own time.
- You are free to take risks in your career.
- You can be as creative as you want. You are not bound by rules and regulations to do everything.
- Sky is the limit for you if you run your own business. You can take it to any height you want.
With benefits come responsibilities. Here are some responsibilities you must shoulder as an entrepreneur:
- Leading the team – As the one who started the business with some ideas, goals and plans, you know where you want to take it. You must lead the team from the front and share your vision with them.
- Establishing company culture – As the person ultimately responsible for the enterprise, you must decide the culture of the company. You need to build a culture around work environment, relationship between the employees, the way the seniors treat their juniors, trainings for the new employees, fulfilling social obligations, deciding methods of doing business, etc.
- Strategic planning – Leading the team is not sufficient for the entrepreneur. They must also know where they want the company to go next and how. This how is the part for which they need to plan strategically. Putting short term as well as long term goals in place, which may be shared with the whole team to follow, is essential.
- Establishing relationships – Building relationships is not only important among the team members. An entrepreneur also needs to connect with other business owners, academicians, influencers, etc. to fulfil their professional goals.
What is environment?
The surrounding in which a person or an organisation operates is called its environment. Everything around you is part of your environment, be it living or non-living. So, plants, animals, soil, water, buildings, infrastructure, plateaus, hills, oceans, all these form our environment.
Relationship between society and environment
Environment and its resources nurture the society living in it. The society should be responsible for maintaining and nurturing the environment in which it operates.
Unfortunately, that was not the case with most entrepreneurs at least till a couple of years ago. Individuals and businesses took environmental resources for granted and never stopped to think if they were harming them. This led to mass deforestation for setting up industries and designer residential colonies, building road and railway networks. River water was obstructed to create huge dams and generate power. Industrial waste was indiscriminately dumped in water bodies.
The effect of this neglect is visible now and people are waking up to the fact that they need to take care of the environment around them if they want to survive.
In this section you will learn about how you can do that. But before understanding how you can care for your environment you must know how you can potentially harm it.
Ecosystem and factors causing imbalance
Look around yourself. Not inside your room but out in the park or garden. What do you see? Plants growing out of the soil, butterflies humming over the flowers, stray cats and dogs roaming around the roads, ants creeping up the mango tree, birds singing on the Horizon. All these living things that you observe form your ecosystem.
Each of them is essential to maintain the balance in the ecosystem, often called ecological balance.
Do you know, if bees disappear today, this planet would be devoid of all living beings in just 11 years’ time.
This is the importance of each and every element of the ecosystem.
If an imbalance is caused in the ecosystem due to pollution, extinction of some species, abundance of some species, etc., ecology is disturbed and whatever we obtain from the environment is also hampered. The environment gives us so many things – food that we eat, water that we drink, air that we breathe, fuel that runs our life and economy – the list is endless. You must stop to think what will happen if we do not get these things as much as you need.
Ecological imbalance is caused by various reasons. In India it is attributed to these five factors:
- Degradation of land and soil – Due to continuous use of land, dumping of waste material, buildings, etc. the quality of land and soil has become very poor.
- Deforestation – As discussed, trees have been cut mercilessly for building industries, roads, railway lines and residential areas.
- Faulty utilisation of water resources – Though Earth is 2/3rd water, only 1% of it is drinkable. But still we have used water resources continuously without thinking of replenishing them.
- Environmental issues due to faulty mining practices – Wrong ways of mining have led to drying of rivers, extinction of complete ecosystems, widespread pollution, etc.
- Industrial and atmospheric pollution – Industries that were set up earlier pollute the air, land and water around them. It is only now that the concept of green industries is taking hold, where the industries
Correcting ecological imbalance
Now that you know the ways in which ecological imbalance is caused, let us discuss some ways of correcting it. These are some of the ways in which we can control ecological imbalance:
- Manage natural resources carefully – We must manage the natural resources that are left to us carefully. We need to understand that we cannot go on using or rather plundering them. We have to think of the scenario when all the natural resources are finished. If we assume that this is a scenario right now, what we will do, and build on from there for adopting an eco-friendly lifestyle.
- Population control – It’s the people who put pressure on the natural resources. If the human population of an area is less, the natural resources are required by the people less and hence can be conserved.
- Protecting water bodies – As you know the earth is two third covered with water bodies. If we protect our water bodies, we would be protecting two-thirds of the earth.
- Recycling waste – Whatever waste we’ve already generated, we need to keep recycling them so that they are not dumped in the ecosystem to cause harm and degradation.
Natural resource conservation
These are the ways in which we can conserve our natural resources:
- Use renewable sources of power, like solar energy and wind energy
- Afforestation to prevent soil erosion
- Reduce water consumption in our homes
- Treat industrial wastes and sewage before they are released into water bodies
- Rainwater harvesting
- Stop animal poaching
- Use biogas and biofuels as much as possible
- Recycle waste
- Adopt paperless way of life both at home and at office
- Stop using plastic
- Minimise consumption of electricity
As you can see, taking care of the environment is not possible by taking a few sporadic steps here and there. It must be a change in the way we live and do things.
Let us see how we can bring a change in the way we do business that is not harmful to the environment around us.
Green economy
An economy that coexists with the environment it is located in and aims for sustainable development without harming the environment is called a green economy. The 2011 UNEP (United Nations Environmental Programme) green economy report says,
To be called green an economy must be more efficient and fairer.
A green economy should be based on these 6 main ideals.
Renewable energy
Sources that are replenished by the nature are called renewable energy resources. Sunlight, wind, rainwater, waves, etc. are some examples of renewable energy sources. They are usually used for generating electricity, transportation and rural energy supply.
Green buildings
A building that is built in such a way that it does not degrade the environment, right from planning, construction, and operation to maintenance and demolition is called a green building. Some things that can be done to have a green building are:
- Using natural materials like mud, bamboo, etc.
- Using rain water harvesting techniques
- Supplying energy through renewable resources like sunlight
Sustainable transport
Sustainable transport refers to using transport that is environmentally sustainable. It means that the mode of transport uses renewable energy, does not pollute the environment and is not expensive as well.
Water management
Water management refers to optimising availability of water through minimised utilisation, recycling and rainwater harvesting. Green economy should look towards methods that do not deplete the groundwater levels.
Waste management
Every economy generates lots of waste. A green economy manages its waste from collection to final disposal in an eco-friendly way. Some examples of waste management practices include:
- Segregating waste
- Recycling as much as possible
- Producing biogas from biodegradable waste
Land management
Using and developing land resources in a way that its ecological balance is not disturbed is called land management. Essentially, it means that practices like organic agriculture, reforestation, groundwater level management, etc. must be adopted. Care should be taken to ensure land productivity is not decreased due to economic activities.
Importance of green economy
The most important benefit of adopting green economy is decreasing environmental effect of pollution. It has the potential to fight burning issues such as:
- Global warming
- Ozone layer hole
- Desertification of land
- Deforestation
These are some benefits of adopting green economy practices:
- Better living quality – Green economy can improve air, water and soil quality, leading to immediate benefits like increased farming output, better health, access to more natural produces, etc.
- Economic growth – Green economy can accelerate economic growth by creating new jobs and giving access to marginalised population. For example, if alternative energy resources are tapped more people will have access to energy. This would raise living standards, help in more education and provide better business opportunities.
- Sustainable development – Green economy provides the way to sustainable development. If you look around yourself you will find people worrying about typical energy resources like petrol, diesel, coal, etc. drying up after a couple of decades. If we adopt renewable energy sources and take care to replenish them, we never need to worry about them depleting and leaving us deprived.
Paradigm shift to green economy is not an easy task because developing nations feel that their economic development will be hampered by this shift. This is a not unfounded because sometimes the shift to green economy is expensive as well as requires technological expertise. However, this can be taken care of by developing indigenous technology and support from developed nations.
Characteristics of successful entrepreneur
These are some of the characteristics of successful entrepreneur:
- They are very passionate about the idea on which their business is based.
- An entrepreneur is a leader who is capable of sharing their vision with their team so that they may together achieve the business goals.
- A successful entrepreneur is highly motivated. They always keep their goal in mind and work towards that goal. Small setbacks in the day-to-day functioning of the business do not demotivate them.
- Successful entrepreneurs are disciplined, hardworking and confident of achieving success.
- They are not afraid to take risks. Whether it is small or big, successful entrepreneurs know that they cannot succeed unless they take risks.
- They know how to plan for daily, weekly, monthly as well as long term goals. They appreciate the difference between effective planning and over-planning so that they don’t lose the flexibility to react to an unexpected situation. If you plan for all possible scenarios, you will find it challenging to handle new situations as they come up. So the planning must have enough scope for making changes.
Relationship between Entrepreneurship and Society
Entrepreneurship is very essential for economic and social development of the society that we live in. By starting a business, entrepreneurs provide opportunity for economic growth to the people around them. The jobs that are created due to the new business employ many people and hence improve status and quality of those families.
Together with economic growth new businesses also promote creativity, innovation and better life quality. Most of the entrepreneurs, when they are successful, want to give back to society. So they work for causes that can benefit people, like healthcare, education, research, caring for the old, better life quality, etc.
It is not only that the society needs entrepreneurs. Vice versa holds good as well. That is, entrepreneurs need society too.
Society provides entrepreneurs with the necessary education and skills needed to start a business. Once the business is launched it needs a positive and friendly environment to grow and become successful. Society facilitates the right environment needed for them to thrive.
Entrepreneurs also need skilful people to work with them and that can be provided only by the society. Many times the financial needs of entrepreneurs is also met by society through venture capitalists and crowdfunding.
Qualities and Functions of an Entrepreneur
Now that you know that entrepreneurs are very essential to the social ecosystem, let us list some of the qualities that an entrepreneur must possess to be successful:
- Hard working
- Full of ideas
- Good planner
- Expert in at least one field
- Creative
- Willing to be a leader
- Disciplined
- Marketing skills
- Good networking skills
- Money management skills
When an entrepreneur starts a business, they need to think beyond just launch and also focus on day-to-day running of the business. These are some of the roles that they fulfil for the business:
- Create jobs
- Recruit the right people
- Lead the team
- Solve everyday problems
- Meet financial targets
- Satisfy customers
Myths about Entrepreneurship
We have discussed the qualities of an entrepreneur as well as their responsibilities. When you look at the list of qualities, it might seem very daunting. This has given rise to lots of myths about entrepreneurship. So before proceeding further let’s discuss some myths prevalent in society about entrepreneurship.
Lack of personal life
The first and foremost myth about entrepreneurship is that entrepreneurs do not have a personal life of their own. They must devote all their time to their business. However, that is not true. They do have a personal life and do things that they want to do. In fact as they are their own masters, they can schedule their work to suit their personal lives. All they need to do is give equal importance to personal and professional lives, and manage their day accordingly.
Love of money
It is true that no entrepreneur will start a business that will not yield a profit but it is rarely true that they do it with the sole motive of earning money. They are often so passionate about their ideas that they start a business to make their dreams come true.
Ritesh Agarwal, the man behind OYO rooms, started his business at the age of 18, before formally completing his degree.
Lots of risk involved
Entrepreneurship involves taking huge risks. Entrepreneurs do take risks but not always. Even when you are working as an employee you take risks while proposing ideas or offering new solutions to problems. So taking risk in your own business is not much different.
You need lots of money to start a business
The amount of money that you need to start a business depends upon your business idea. Also, not all of the money is needed before you launched the business. So lack of money should not stop you from starting a business of your own.
Entrepreneurs are full of great ideas
It is not necessary that you can start a business only when you have some great unique idea. You can take an existing idea, make changes to meet some customer demand and launch a business successfully.
Entrepreneurs are formally trained
Most people believe that entrepreneurs are trained in starting business. But that is not true. Not everyone who starts a business is trained in it. In fact, most of the people starting a business do not know how to run it when they start.
Mark Zuckerberg and Bill Gates are two people who dropped out of college to start their own businesses. Michel Dell, owner of Dell, a global computer manufacturing company, started a business in his hostel room when he was in 1st year of college.
Entrepreneurship as a career option
Entrepreneurship is fast emerging as a viable career option for many people, especially in developing economies like India. This is mainly due to these reasons:
- Job opportunities are not growing at the same rate as people eligible for joining the workforce.
- People are becoming more mindful of what they want to do in life before embarking on a career; it’s definitely not only to earn money.
- Being their own boss sounds very enticing because that allows them to lead a fulfilling personal life and also pursue other dreams and goals.
- They can do things that they feel are right, in the way that they take to be correct.
- They can take risks in their careers without being answerable to someone else. Employees need to convince their boss that the risk is worth taking.
- They can explore new ideas that have never been tried before.
Sustainable development
Economic growth that does not drain the natural resources in its environment is called sustainable development. The main principle that guides sustainable development is that growth need not mean excessive utilisation and eventual loss of natural resources.
Sustainable development aims to conserve natural resources for future generations. But, that does not mean we must lose out on present gains for the future. In fact, sustainable development is about finding ideas that ensure we do not lose out on present gains for the future. That means it has to be a Win-Win situation for both present and future.
Need for Sustainable Development
Mindless industrialisation and development in the 19th and 20th century have already depleted our natural resources to a point where two major effects are visible:
- Climate change due to ecological imbalances
- Loss of resources like forest products, coal, natural gas, etc.
The term sustainable development was coined in the 1980s when environmentalist realised that we were causing harm to the earth and natural resources provided by it for the sake of economic development and growth.
Any development undertaken by society aims to improve the life quality of its people. To ensure long term development and growth, there must be a balance between the environment and economic needs of the society.
You can see for yourself that there are three factors that must be taken care of during any developmental activity – society, economics and environment. Adoption of sustainable development paradigm is needed to maintain the balance between the three.
Importance of sustainable development
Sustainable development is important for continuous growth of mankind. As the global population increases, the demand for basic needs like food, water, living spaces, education and Healthcare increases.
To meet these growing demands, resources need to be utilised. However, we cannot forget that size of the earth cannot grow, nor will its natural resources increase.
We must learn to optimise our resources so that we can continue to meet the growing demand in future.
We also need to decrease our dependence on non-renewable resources while utilising the renewable resources to its maximum capacity.
Sustainable Development aims to do just that – maximize the utilisation of renewable resources to decrease dependence on non-renewable resources.
Ensuring Sustainable development
Sustainable development has to be the new way of life if we want to continue living on mother earth for ages to come. These are some of the ways in which we can embrace sustainable development:
- Reduce use of non-renewable resources like coal, petroleum and natural gas. One easy way of doing this is to pool vehicles and reduce petrol consumption.
- Increase use of renewable resources like wind, water and solar energy
- Conserve whatever forest area exists and add more forest cover
- Decrease our requirements so that less resources are needed
- Avoid wastage of resources and produce less garbage
- Reuse and recycle things
Challenges in sustainable development
Adopting sustainable development is not easy. Let us look at some of the problems in undertaking sustainable development.
Change in mindset
Sustainable development requires throwing out old ways and accepting new methods. This requires a change in mindset, which is never easy but not impossible too.
Technology and money requirements
The most pressing demand to sustain the environment is to reduce carbon emission. This can be done by harnessing renewable resources. But this is both technology intensive and expensive. So not all economics can adopt this. All the countries need to work towards this together, sharing both technology and resources with each other so that even the not so wealthy economy can also follow sustainable development.
Sustainable development goals
To promote this idea and encourage people and countries to adopt sustainable mind-set and share resources for sustainable development, the United Nations set 17 global sustainable development goals (SDGs) in 2015, which take care of all three aspects – society, economics and environment – that are affected by any development. These goals are:
- No Poverty
- Zero Hunger
- Good Health and Well-being
- Quality Education
- Gender Equality
- Clean Water and Sanitation
- Affordable and Clean Energy
- Decent Work and Economic Growth
- Industry, Innovation and Infrastructure
- Reduced Inequality
- Sustainable Cities and Communities
- Responsible Consumption and Production
- Climate Action
- Life Below Water
- Life on Land
- Peace, Justice and Strong Institutions
- Partnerships to achieve the Goal
The vision sets a target of 2030 to implement it globally. If all entrepreneurs start their businesses with sustainable development in mind, achieving the SDGs would become that much easier.
Recap
- Any organisation that uses economic resources to provide services or product to any person or organisation is a business.
- Businesses are of four types – service, manufacturing, merchandising and hybrid.
- The items used to make the product are called raw materials.
- The act of starting a business is called entrepreneurship.
- A person who starts the business to make profits or bring about change is called an entrepreneur.
- The surrounding in which a person or an organisation operates is called its environment.
- Society should be responsible for maintaining and nurturing the environment in which it operates.
- All these living things that you observe form your ecosystem.
- An economy that coexist with the environment it is located in and aims for sustainable development without harming the environment is called a green economy.
- Sources that are replenished by the nature are called renewable energy resources.
- A building that is built in such a way that it does not degrade the environment, right from planning, construction, and operation to maintenance and demolition is called a green building.
- Sustainable transport refers to using transport that is environmentally sustainable.
- Water management refers to optimising availability of water through minimised utilisation, recycling and rainwater harvesting.
- A green economy manages its waste from collection to final disposal in an eco-friendly way.
- Using and developing land resources in a way that its ecological balance is not disturbed is called land management.
- Green economy can improve air, water and soil quality.
- Green economy can accelerate economic growth by creating new jobs and giving access to marginalised population.
- Green economy provides the way to sustainable development.
- An entrepreneur is a person who starts a business with the aim of providing a product or service to the people and making a profit in return.
- The act of starting a business is called entrepreneurship.
- Entrepreneurship is very essential for economic and social development of the society that we live in.
- It is not necessary that you can start a business only when you have some great unique idea.
- Economic growth that does not drain the natural resources in its environment is called sustainable development.
- Sustainable development aims to conserve natural resources for future generations.
- Sustainable development is about finding ideas that ensure we do not lose out on present gains for the future.
- The term sustainable development was coined in the 1980s.
- All types of development is undertaken by society to improve the life quality of its people.
- There are three factors that must be taken care of during any developmental activity – society, economics and environment.
- To promote the idea and encourage people and countries to adopt sustainable mind set, the United Nations set 17 global sustainable development goals.
