MSME and Entrepreneurship Development

Entrepreneurship can be defined as a process of setting up a new business or profession, bearing most of the risk, and enjoying most of the rewards. The person or group of people who set up such businesses are called entrepreneurs. It is setting up a business with some innovative and new idea that is directly related to solving some sort of problem in society. It also plays a very significant role in the overall economic development of a nation, creates employment and expands the various professions prevailing in the economy.

Characteristics of Entrepreneurship:

1. Systematic Activity: Entrepreneurship is a step-by-step process. Entrepreneurs should have some skill, temperament, knowledge, and most importantly, a purpose to get into entrepreneurship. It is not something that can happen by chance.

2. Lawful and Purposeful Activity: Entrepreneurship businesses should not be carried forward with illegal practices. The business should be lawful and abide by all the Government’s rules & regulations. One can not try to legitimize unlawful actions as entrepreneurship on any grounds. 

3. Innovation: Innovation is the heart of entrepreneurship. Entrepreneurship involves the creation of value by offering something new and innovative that can solve larger problems in society. 

4. Organisation of Production: Entrepreneurship involves creating a combined utilization of diverse factors of production, land, labour, capital and technology. Entrepreneurs are responsible to mobilize these resources into a productive unit or firm in a response to a perceived business opportunity. 

5. Risk-taking: In comparison to other businesses, entrepreneurs are believed to take high risks. With no assured payoffs, quitting of jobs, challenging market conditions, friction at the time of entry, etc. make an entrepreneur’s position very risky.

The size of a business in small industries and business establishments is a major issue. Several parameters can be used to measure the size of business units. These include the number of people employed in a business, capital invested in a business, the volume of output or value of the output of a business, and power consumed for business activities. The definition used by the Government of India to describe MSME is based on investment in plants and machinery. 

The definition and classification of MSME are as per the MSMED (Micro, Small, and Medium Enterprises Development) Act of 2006, (Revised Classification applicable w.e.f 1st July 2020):