How to judge the Performance of Entrepreneurs?

Criteria to Judge

The main criteria to judge performance of entrepreneurs are as follows:

1. Gestation Period:

Gestation period is the time gap between the date of incorporation and the date of commencement of commercial production. The Gestation period of two to three years is regarded as satisfactory by the financial institutions.

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2. Financial Result:


In order to judge financial health of units, return on capital employed, net profit over sales, net profit over net worth and other rations were used.

3. Capacity Utilization:

Capacity utilization depends upon the availability of required inputs like raw materials, power, labour etc. and market for the finished capacity. About 50% of entrepreneurs used 80% capacity. Most of the entrepreneurs could break even at 6-% of the installed capacity.

4. Expansion and diversification:

Expansion refers to the increased production of the same product whereas diversification refers to production of new type of products. All the forms achievi9ng full capacity utilization tied for expansion and some of them opted for diversification.

5. Value added by manufacture:

It refers to the gross value of output minus value of raw materials and other inputs used in the production process. It can be used as an indicator of entrepreneurial abilities such as preparedness to assume higher degree of risk and ability to plan and operate relatively large firms.

6. Growth of offspring enterprise:


The number of ancillaries that have originated from a unit was taken as a manifestation of growth.

7. Other factors:

Large number of other factors such as sales turnover, size of employment generated, volume of exports, research and development activity, import substitution etc. can be used to judge entrepreneurial performance.

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