Lesson 2: Entrepreneurship & SME's

Types of entrepreneurship based on technology use

Technical, Non-Technical

Technical Entrepreneur

Utilizes science and technology for innovation and production

Non-Technical Entrepreneur

Focuses on marketing, sales, and business strategies rather than technological advancements

Types of entrepreneurship based on business type

Trading, Manufacturing, Agricultural

Trading Entrepreneur

Engages in buying and selling products as a middleman

Manufacturing Entrepreneur

Produces goods by converting raw materials into finished products

Agricultural Entrepreneur

Focuses on farming, agricultural production, and marketing.

Types of Entrepreneurship based on Ownership

Private Entrepreneur, State Entrepreneur, Joint Entrepreneur

Private Entrepreneur

Individually owns and manages a business

State Entrepreneur

Business owned and operated by the government

Joint Entrepreneur

A business partnership between the government and private entities

Types of entrepreneurship based on gender

Men Entrepreneurs, Women Entrepreneurs

Men Entrepreneurs

Businesses owned and controlled by men

Women Entrepreneurs

Businesses where women own at least 51% of capital and employment opportunities are predominantly for women

Types of entrepreneurship based on enterprise size

Small-Scale Entrepreneur, Medium-Scale Entrepreneur, Large-Scale Entrepreneur

Small-Scale Entrepreneur

Investment in plant/machinery up to Rs 1 crore

Medium-Scale Entrepreneur

Investment between Rs 1 crore and Rs 5 crore

Large-Scale Entrepreneur

Investment exceeding Rs 5 crore

Types of entrepreneurship based on Clarence Danhof’s Classification

Innovating Entrepreneurs, Imitative Entrepreneurs, Fabian Entrepreneurs, Drone Entrepreneurs

Solo Operators

Work independently with minimal employees

Active Partners

Jointly manage businesses with active involvement

Inventors

Focus on research and development of new products

Challengers

Thrive on business challenges and risk-taking

Buyers

Prefer acquiring existing businesses instead of starting new ones

Life-Timers

Consider business as an integral part of life, often family-owned

Small and Mid-Size Enterprises (SME’s)

are businesses that operate below a specific revenue, asset, or employee threshold, which varies by country and sometimes by industry

Small and mid-size enterprises (SMEs)

are businesses with a limited number of employees, revenue, or assets

European Union

defines a small enterprise as having fewer than 50 employees and a medium-sized enterprise as having fewer than 250

U.S

SMBs

Kenya

MSMEs

India

MSMEDs

SMEs

are major contributors to employment and economic growth worldwide. In emerging economies, they provide approximately 45% of jobs and contribute about 33% of GDP

Characteristics of Small Business Enterprises

Limited Investment, Owner-Managed, Labor-Intensive, Unorganized Labor, Local Operations

Limited Investment

SMEs are usually funded by individuals or small groups, often operating as sole proprietorships or partnerships

Owner-Managed

The business is closely linked to its owners, who are directly involved in management

Labor-Intensive

SMEs rely on manual labor and less sophisticated machinery

Unorganized Labor

Due to their small scale, employees often lack formal labor unions

Local Operations

SMEs primarily operate within their local markets, though some may engage in exports

Management Functions of SME’s

Accounting&Finance, Human Resources, Facility Management, Information Technology, Customer Focus, Website Development, Social Media, Search Engine Optimization (SEO), Work-Life Balance, Creating a Fun Workplace

Accounting & Finance

Managing payroll, taxes, and financial records is critical. Hiring a professional accountant can help avoid tax-related stress.

Human Resources

As businesses grow, structured policies and compliance with labor laws become essential

Facility Management

If an office or facility is required, businesses must handle maintenance and upkeep efficiently

Information Technology

SMEs rely on IT for operations, making reliable technical support crucial.

Customer Focus

Understanding customer needs and maintaining good service are essential for business success.

Website Development

A well-maintained, user-friendly website is vital for attracting and retaining customers

Social Media

Social media platforms are an inexpensive yet powerful tool for marketing.

Search Engine Optimization (SEO)

Listing on business directories and monitoring online reputation is essential for visibility

Work-Life Balance

Entrepreneurs must balance their business responsibilities with personal well-being

Creating a Fun Workplace

A positive work environment enhances productivity and employee satisfaction

Sole Proprietorship

Owned and operated by one individual, simple to set up, but carries unlimited liability

Partnership

Two or more individuals share ownership, profits, and liabilities. A limited partnership can offer liability protection for some investors

Corporation

A separate legal entity that shields owners from liability but may face double taxation

C Corporation

Can have unlimited shareholders, ideal for attracting investors

S Corporation

Allows income to pass through to owners, avoiding corporate taxes

Limited Liability Company (LLC)

Combines the benefits of a corporation and a partnership, limiting liability while allowing profits to pass through to owners