CHSE Odisha Fundamentals of Entrepreneurship cheat sheet

Entrepreneur (Cantillon, 1755): the risk-bearer who buys inputs at known prices and sells output at uncertain prices; the function is arbitrage under uncertainty.

Schumpeter's definition: entrepreneurship is carrying out new combinations - new product, new method, new market, new source of supply, new organisation (creative destruction).

Kirzner's definition: alertness to previously unnoticed profit opportunities; the entrepreneur restores equilibrium rather than disrupting it.

Drucker's definition: entrepreneurship is purposeful innovation - the systematic search for change and its exploitation as opportunity; it is a practice, not a personality trait.

Enterprise vs. entrepreneurship: enterprise = the business organisation; entrepreneurship = the process of creating and managing it; entrepreneur = the person performing the function.

Significance chain: capital formation, employment generation (MSMEs are labour-intensive), balanced regional development, innovation diffusion, export earnings, and dispersal of economic power.

Nature attributes: economic activity, innovation-bearing, risk-bearing, dynamic, purposeful, and process-based (idea → opportunity → venture → growth).

Distinguish intrapreneur (innovates inside an existing firm with the firm's resources) from entrepreneur (bears own risk and owns the venture).

Four-factor production model: land, labour, capital, and entrepreneurship as the organising factor that coordinates the other three.

McClelland's n-Ach: entrepreneurs score high on need for achievement; high n-Ach correlates with moderate-risk preference, not high-risk gambling.

Kakinada (Andhra Pradesh) experiment, McClelland & Winter (1960s): achievement-motivation training raised the number of new businesses among trainees versus controls - evidence that n-Ach can be learned.

Locus of control (Rotter): internal locus - belief that outcomes follow one's own actions - is associated with entrepreneurial initiative; external locus with passivity.

Risk-propensity: entrepreneurs prefer calculated/moderate risk where they can influence the outcome; risk-neutrality in decision terms, not risk-seeking.

Timmons model: the venture succeeds when opportunity, resources and team are balanced and fit; the entrepreneur's role is fit and balance, not any single trait.

Competency clusters: opportunity-seeking, persistence, commitment, information-seeking, quality/efficiency orientation, planning, persuasion, and networking.

Motivation types: pull factors (independence, achievement, profit) versus push factors (unemployment, job dissatisfaction, displacement) - push-led ventures often show lower survival.

Achievement motive is measurable and trainable via goal-setting, feedback, and role models; traits alone do not predict venture success - environment and competence intervene.

Distinguish trait (stable disposition) from competency (demonstrated behaviour/skill) from motive (need that energises behaviour).

PESTEL scan: Political, Economic, Social, Technological, Environmental, Legal - used to identify external opportunities and threats before venture launch.

Economic environment variables: GDP growth, inflation, interest rate, credit availability, market size, per-capita income, and exchange rate.

Ecosystem elements: policy and regulation, finance (debt/equity), markets, human capital, business support services, physical infrastructure, and culture.

Legal forms in India: sole proprietorship (no separate legal entity, unlimited liability), partnership (Indian Partnership Act 1932), LLP (LLP Act 2008, limited liability, fewer compliance duties), private limited company (Companies Act 2013, separate legal entity).

Registration identifiers: Udyam Registration (replaced Udyog Aadhaar) for MSME status; GST registration for turnover above the prescribed threshold; Shops and Establishments registration with the local authority.

MSME classification (revised 2020, composite criteria): micro - investment ≤ ₹1 crore and turnover ≤ ₹5 crore; small - ≤ ₹10 crore and ≤ ₹50 crore; medium - ≤ ₹50 crore and ≤ ₹250 crore.

Institutional support map: DIC (district-level facilitation), SIDBI (small-industry finance), NSIC (marketing and tender support), KVIC (village industries), NABARD (rural and agri-linked).

Startup India: DPIIT recognition, self-certification of compliance, tax exemptions under specified conditions, and access to the Fund of Funds.

SWOT analysis converts the environmental scan into strategy: match internal strengths to external opportunities; convert threats into defensive plans.

Idea sources: personal experience, observation of unmet demand, hobbies, previous employment, trade fairs, government schemes, research findings, and imitation/adaptation of existing models.

Idea generation techniques: brainstorming (quantity first, no criticism during generation), SCAMPER (Substitute, Combine, Adapt, Modify, Put to other use, Eliminate, Reverse), focus groups, and customer interviews.

Idea versus opportunity: an idea is a thought; an opportunity is an idea that is attractive, durable, timely, and anchored in a product or service that creates value for a buyer.

Opportunity screening criteria: market size and growth, customer willingness to pay, competitive intensity, capital requirement, regulatory feasibility, and founder fit.

Gap analysis: compare current market offerings with customer needs to locate underserved segments; the gap defines the value proposition.

Feasibility sequence: market feasibility (who will buy, at what price) → technical feasibility (can it be made/delivered) → financial feasibility (will it pay) → managerial feasibility.

Product life cycle (introduction, growth, maturity, decline) determines timing: entering at maturity demands cost or differentiation advantage, not novelty.

Value proposition statement form: for [target customer] who [need], the product [name] provides [benefit] unlike [alternative] because [evidence].

Demand estimation: top-down (total market × target share) versus bottom-up (units per customer × number of reachable customers); cross-check both.

Project report sections: promoter background, product/process description, market analysis, technical plan, financial projections, and risk assessment.

Project cost = fixed capital (land, building, plant, machinery, pre-operative expenses) + margin money for working capital; it is not the same as the project's total funding requirement.

Means of finance: promoter's own contribution plus term loan plus working capital limits; the debt-equity ratio is a key appraisal ratio.

Break-even quantity = Fixed Cost ÷ (Selling Price per unit − Variable Cost per unit); break-even sales value = Fixed Cost ÷ P/V ratio, where P/V ratio = Contribution ÷ Sales.

Depreciation methods: straight-line (equal annual charge) and written-down value (fixed percentage on book value); depreciation is a non-cash expense that affects tax and cash flow differently.

Appraisal criteria: payback period (years to recover outlay), NPV (discount at cost of capital; accept if > 0), IRR (discount rate making NPV zero; accept if > cost of capital), and the profitability index.

Working capital cycle: raw material → work-in-progress → finished goods → receivables → cash; shorter cycle means lower working capital need.

Cash flow versus profit: profit is accrual-based; cash flow tracks actual receipts and payments, and a profitable venture can still fail for want of liquidity.

Sensitivity analysis: vary one assumption (price, volume, cost) to see how far it can move before the project turns unviable.

Functions: production/operations, marketing, finance, human resources, and purchasing - in a small firm one owner often performs several simultaneously.

Plant location factors: proximity to raw material and market, transport, power, labour availability, and incentives; plant layout choices are process, product, and fixed-position.

Production planning decisions: capacity, scheduling, inventory (EOQ = √(2DS/H), where D = annual demand, S = order cost, H = holding cost per unit per year), and quality control.

Marketing mix (4Ps): product, price, place, distribution - for services add people, process, and physical evidence (7Ps).

Pricing methods: cost-plus, penetration (low entry price), skimming (high initial price), and competitive parity.

Market segmentation, targeting, positioning (STP) precede the mix; a small firm competes by focus on a narrow segment rather than by scale.

Financial management: distinguish fixed capital from working capital; use the current ratio (current assets ÷ current liabilities) as a liquidity check.

Human resource cycle in small firms: recruitment, training, appraisal, and statutory compliance (minimum wages, PF/ESI where applicable, workplace safety).

Record-keeping essentials: cash book, sales and purchase registers, stock records, and statutory returns; absence of records is a leading cause of small-business failure.

EDP definition: a structured programme to develop entrepreneurial motivation and competence in potential or existing entrepreneurs, typically combining achievement motivation, business knowledge, and a project report.

EDP phases: pre-training (selection of trainees), training (motivation, management, technical skills), and post-training follow-up (handholding, credit linkage).

Selection criteria for EDP trainees: motivation, background, aptitude, and willingness to start a venture - not formal qualification alone.

National institutions: NIESBUD (Noida) for training of trainers and EDP curriculum; EDII (Ahmedabad) for entrepreneurship education and research; NIMSME (Hyderabad) for MSME management training.

State-level: DIC (District Industries Centre) is the single-window agency for registration, incentives, and guidance; state financial corporations provide term loans.

Financial institutions: SIDBI (principal institution for MSME promotion and refinance), IFCI, and state-level SFCs; NABARD supports rural non-farm enterprises.

Central schemes: CGTMSE (credit guarantee for collateral-free micro and small enterprise loans), PMEGP (Prime Minister's Employment Generation Programme, implemented through KVIC/DIC), and Stand-Up India.

Limitations of EDPs: weak trainee selection, shortage of trained trainers, poor follow-up, and lack of credit linkage reduce conversion to actual ventures.

Incubators and technology parks provide space, mentoring, and seed support; they lower the cost of early-stage failure.

Business ethics: application of moral principles to commercial decisions - fair dealing, honesty in disclosure, avoidance of bribery, and respect for stakeholder rights.

Triple bottom line (Elkington): people, planet, profit - performance is judged on social, environmental, and financial results together.

CSR under Section 135 of the Companies Act 2013: applies to companies with net worth ≥ ₹500 crore, or turnover ≥ ₹1,000 crore, or net profit ≥ ₹5 crore; spend at least 2% of average net profit of the preceding three financial years.

CSR spending is a statutory obligation for covered companies; it is distinct from philanthropy (voluntary) and from corporate governance (board oversight).

Stakeholder theory (Freeman): the firm is accountable to shareholders, employees, customers, suppliers, community, and the environment, not shareholders alone.

Sustainable enterprise practices: resource efficiency, waste reduction, renewable energy use, ethical sourcing, and product life-cycle thinking.

Greenwashing: claiming environmental credentials without substantive action - an ethical and reputational risk, not a sustainability strategy.

Code of conduct elements: conflict-of-interest rules, anti-bribery policy, fair recruitment, whistle-blower protection, and grievance redressal.

Ethical decision tests: legality, fairness to affected parties, transparency (would disclosure embarrass the firm), and consistency (universalising the action).