|Training Entrepreneurs for Small Business Creation: Lessons from Experience (ILO, 1988, 154 p.)|
Developing indigenous entrepreneurs
The Entrepreneurship Development Institute (EDI) of India is a national organisation sponsored by nation-wide financial institutions and the Government of Gujarat State. It has emerged from the successful experiences of the Centre for Entrepreneurship Development of the Gujarat Industrial and Technical Consultancy Organisation. EDI conducts research, training and institution-building activities for encouraging the participation of backward regions and special target groups in entrepreneurial activities. The programme for indigenous entrepreneurship developed at the Gujarat Centre for Entrepreneurship Development (CED) consists of:
(a) selecting potential entrepreneurs;
(b) achievement motivation training;
(c) product selection and project report;
(d) business management training;
(e) practical training and work experience;
(f) post-training support.
The approach of CED and EDI is thoroughly described in T. Rao Venkateswara and Pareek Udai: Developing entrepreneurship: A handbook (New Delhi, Eureka Marketing Group, 1978). The descriptions of the programme components here are extracted from Patel.1
Identification, recruitment and selection of trainees
The entrepreneurial traits assessed in the behaviourial tests include:
(a) the need to achieve, evident in an individuals desire to compete with some standard of excellence and success in performance;
(b) risk-taking, as entrepreneurs are found to have an inclination to take calculated, moderate intelligent risks. They tend to avoid both excessively high as well as low-risk situations;
(c) a positive self-concept, which includes self-confidence as well as self-efficacy and a positive image of ones own abilities and achievements;
(d) initiative and independence, as such people show not only initiative, but also independence in their day-to-day behaviour. They like to act on their own rather than follow directions;
(e) problem-solving ability, a tendency to approach problems in order to solve them;
(f) optimism about the future, even though there may be dissatisfaction with present working conditions;
(g) an interest in searching the environment to seek answers to present questions, setting goals and fulfilling them within a time scale.
In this selection process, persons possessing a minimum level of entrepreneurial traits (normally decided by a cut-off point in the scores) and having experience in or familiarity with commercial or industrial activity stand a better chance of being selected. However, there are no minimum conditions of education and length of experience, occupational background or income. Even young engineers and graduates with no work experience are selected if their entrepreneurial capacity is adequate or capable of development, and if they are ready to undertake smaller, simpler projects consistent with their overall background and know-how. Such persons should, however, be willing to undertake technical training or obtain work experience in existing factories, or attend the Technical Training Workshop of the programme.
Business opportunity guidance
In the initial stage of the programme itself, guidance sessions are held on selecting an appropriate industrial opportunity for each trainee consistent with his experience, competence and overall capabilities. Perceiving a profitable opportunity for commercial exploitation is an essential quality of an entrepreneur. By providing information on various feasible industrial opportunities through a team of experts (successful industrialists, leading traders and merchants in manufactured commodities, and technical experts from industry and State organisations), the programme encourages the trainees to develop this quality. Inadequate knowledge, at the beginning, of an opportunity or a clear project proposal need not be a handicap in aspiring to be an owner-entrepreneur. The training culminates in the completion of a project report by each trainee. This exercise is found to expose the participants to the thought process and field experience necessary for the rational choice of business, product line, market mix and so on, and for determining their feasibility in terms of environmental constraints and opportunities. It also constitutes an instrument for raising finance for the project and thereby links up completion of training with the support of financial institutions for implementation.
Achievement motivation training
In the first phase, intensive achievement motivation training, through a five-day residential programme, is given to develop entrepreneurial traits such as the need to achieve, risk-taking and initiative, as referred to above. The motivation inputs serve to (a) increase the need for achievement; (b) help participants to define their goals realistically and work towards their achievement; and (c) heighten their self-awareness.
The small-scale entrepreneur also has to be a manager since he or she cannot afford specialists to look after the multiple business decisions regarding sales, finance, purchase and personnel. Although rounded managerial experience is essential for better performance, the new (trainee) entrepreneur emerging from the ranks of employees and fresh graduates usually possesses familiarity and experience in only one area, either production, sales or supervision. The overall managerial understanding is therefore developed in the business sessions held in the evening.
The syllabus has been developed in consultation with operating entrepreneurs, practising trade and industry experts and past trainees. It aims at enabling the participants to look at an enterprise in totality and introduces them to the elements of planning, budgeting and control as aids to good management.
There is no full-time training staff except the project leaders and project formulation experts. Instruction is provided through management practitioners and professionals, business and industry executives, experts of State Industrial Corporations and small-scale entrepreneurs. In-house core teams are now formed from the group of 35 trainers for small town and rural centres where experts from industry or trade are not locally available.
Field trips to selected industrial units are arranged to expose trainees to operational conditions. For those lacking in industrial experience, in-plant training is arranged for six hours daily in suitable factories for as long as required. A well-equipped technical training workshop has been set up by the Corporations to develop industrial skills among new trainees and offers product and development opportunities.
Follow-up: Post-training support
Factory sheds and industrial plots with power, water, roads and drainage have been set up in some 150 different industrial locations (estates). Gujarat State Financial Corporation finances industries up to Rs.3 million each and also operates the innovative New Entrepreneurs Scheme providing need-based finance. The Gujarat Small Industries Corporation distributes scarce raw materials and provides machinery on a hire-purchase basis, as well as marketing assistance. The industrial agencies with a direct stake in the scheme are getting better clients for their loans and infrastructure facilities. Since 1979, a new support organisation, Gujarat Industrial and Technical Consultancy Organisation (GITCO), has been set up to provide comprehensive project selection, implementation and management, and production and marketing support to small units.
1 V.G. Patel: Entrepreneurship development programme in India and its relevance for developing countries. Paper prepared for the Economic Development Institute of the World Bank (Ahmedabad, EDI, 1985).
ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF INDIA
83/A Swastik Society, Navrangpura
AHMEDABAD 380 009, India