SESSION 3q

SESSION 3: SIGNIFICANCE OF ENTREPRENEURSHIP IN SOCIO-ECONOMIC
DEVELOPMENT
Learning objectives:
i. Explain risks associated with entrepreneurship.
ii. Explain risk management techniques
iii. Describe role of entrepreneurship in affecting socio-
economic development.
RISKS ASSOCIATED WITH ENTREPRENEURSHIP
1. Lack Of Steady income
No doubt, entrepreneurs make an obscene amount of money.
But no one becomes Steve Jobs in one day or even in a
couple of months. Means, the path is long and full of risks
and it’s pretty black and white because you have to quit your
current job, give up your career and dive deep into
entrepreneurship. And in the past, you had a steady source
of income, but now there’s no guarantee
2. Competitors
Every entrepreneur starts a business with a resolve to stay
afloat despite the high competition. But there’s another form
of competition that might not be as easy to face.
Take Uber for example. It is quite obvious how the company
is disrupting the market, or the taxi market to be exact. This
is one of the major risks in entrepreneurship that you have
to take in your entrepreneurship journey.
3. Economy Fluctuations
Globalization is rampant today, there’s no doubt about it.
And every entrepreneur strives to try to tap into the market
by increasing their outreach. But this scenario comes up
with one of the most common entrepreneurship risks, which
is the uncertain economy. If this fluctuation somehow ends
up working against you, then you will be trapped in losses.
4. Cyber Security Risks

One of the most common entrepreneurship risks and
challenges, especially in today’s world is – cybersecurity
risks. Everyone knows its drastic effect (in terms of costs
and valuable data) if your confidential information leaks out.
5. Maintaining Steady Customers
Convincing your first client is hard enough, but even when
your business is up and running, maintaining a steady
customer pipeline is not straightforward. It is also somewhat
of a difficult task to get people to put their faith in you when
you are at the early stage of your business. For that, you have
to work on building a loyal community and a large network
of prospects to get a steady lead flow in your pipeline.
6. Trusting Your Business Partner or A Key Employee

Many entrepreneurs overlook this, however, trusting a key
employee or even your business partner is one of the most
common entrepreneurship risks. For one, when you are just
getting started, you are unlikely to have hordes of
employees. Instead, you will probably have a business
partner and only a few employees. To get things up and run
the business smoothly, you will have to put a huge amount of
trust in your business partner or a key employee
7. Sacrificing private capital
More often than not, you have to shell out your own private
savings to fund your business venture.This is one of the most
common entrepreneurship risks as it burdens you even
more.
If God forbid, your business venture fails to pick up, then you
might not even have a safety capital to fall back on. This is
actually a big risk to take, however, once things start to pick
up, you will be happy that you took this risk.
8. Investing Your Personal Time & Health

If you think that being an employee takes away your social
life and the maximum amount of time (and health), then you
haven’t seen anything yet. Being an entrepreneur is a tedious
task that will take away a lot from you. Initially, you might
even feel like the whole business venture is only taking away
your resources without giving away anything in return.
RISK MANAGEMENT TECHNIQUES
Keep a cash reserve
When you just start with your business, the chances are
higher that you will not get any customers for at least 4-6
initial months. That’s why it is a good idea to keep at least a
sufficient amount of reserve in order to survive these crucial
months hassle-free.
Run a proper analysis

You can emerge out of such risks only if you run a proper
analysis of your industry. You need to identify the potential
disruptions that might affect you in the future so that when
the time comes you are equipped with all the workable
solutions for such challenges. For that, we highly
recommend you run a SWOT analysis!
It is a study undertaken by an organization to identify its
internal strengths and weaknesses, as well as its external
opportunities and threats. And it should be noted that, don’t
wait for other start-ups to come out and offer something
new. Stay ahead of time and keep on introducing new
technology regularly.
Get referrals and use word-of-mouth marketing
This is where you can leverage tactics such as word-of-
mouth marketing, customer testimonials, and the list goes
on and on. Also, if you see that someone in your network
might help you out in getting more leads, then don’t hesitate
to reach out. Ask for referrals, recommendations, and
anything else to get the word around.
You can even use Bing or Google Ads to grow your client
pipeline.
Came as a shocker, right?
ROLE OF ENTREPRENEURSHIP IN AFFECTING SOCIO-
ECONOMIC DEVELOPMENT
1. Wealth Creation and Sharing: By establishing the

business entity, entrepreneurs invest their own resources
and attract capital (in the form of debt, equity, etc.) from
investors, lenders and the public. This mobilizes public
wealth and allows people to benefit from the success of
entrepreneurs and growing businesses. This kind of pooled
capital that results in wealth creation and distribution is one
of the basic imperatives and goals of economic development.
2. Create Jobs: Entrepreneurs are by nature and definition job
creators, as opposed to job seekers. The simple translation is that
when you become an entrepreneur, there is one less job seeker in
the economy, and then you provide employment for multiple other
job seekers. This kind of job creation by new and existing businesses
is again is one of the basic goals of economic development
3. Balanced Regional Development: Entrepreneurs setting
up new businesses and industrial units help with regional
development by locating in less developed and backward
areas. The growth of industries and business in these areas
leads to infrastructure improvements like better roads and
rail links, airports, stable electricity and water supply,
schools, hospitals, shopping malls and other public and
private services that would not otherwise be available.
Every new business that locates in a less developed area will
create both direct and indirect jobs, helping lift regional
economies in many different ways. The combined spending
by all the new employees of the new businesses and the
supporting jobs in other businesses adds to the local and
regional economic output. Both central and state
governments promote this kind of regional development by
providing registered MSME businesses various benefits and
concessions.
4. GDP and Per Capita Income: India’s MSME sector,
comprised of 36 million units that provide employment for
more than 80 million people, now accounts for over 37% of
the country’s GDP. Each new addition to these 36 million
units makes use of even more resources like land, labor and
capital to develop products and services that add to the
national income, national product and per capita income of
the country. This growth in GDP and per capita income is
again one of the essential goals of economic development.
5. Standard of Living: Increase in the standard of living of
people in a community is yet another key goal of economic
development. Entrepreneurs again play a key role in
increasing the standard of living in a community. They do
this not just by creating jobs, but also by developing and
adopting innovations that lead to improvements in the
quality of life of their employees, customers, and other
stakeholders in the community. For example, automation
that reduces production costs and enables faster production
will make a business unit more productive, while also
providing its customers with the same goods at lower prices.
6. Exports: Any growing business will eventually want to
get started with exports to expand their business to foreign
markets. This is an important ingredient of economic
development since it provides access to bigger markets, and
leads to currency inflows and access to the latest cutting-
edge technologies and processes being used in more
developed foreign markets. Another key benefit is that this
expansion that leads to more stable business revenue during
economic downturns in the local economy.
7. Community Development: Economic development
doesn’t always translate into community development.
Community development requires infrastructure for
education and training, healthcare, and other public
services. For example, you need highly educated and skilled
workers in a community to attract new businesses. If there
are educational institutions, technical training schools and
internship opportunities, that will help build the pool of
educated and skilled workers.

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SESSION 3: SIGNIFICANCE OF ENTREPRENEURSHIP IN SOCIO-ECONOMIC

4. Cyber Security Risks

6. Trusting Your Business Partner or A Key Employee

8. Investing Your Personal Time & Health

Run a proper analysis

1. Wealth Creation and Sharing: By establishing the

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