ENTERPREURSHIP
The activity of setting up a business or businesses, taking
on financial risks in the hope of profit.
Importance of
Entrepreneurship
Entrepreneurship offers the following benefits:
1. Development of managerial capabilities:
The
biggest significance of entrepreneurship lies in the fact that it helps in
identifying and developing managerial capabilities of entrepreneurs. An
entrepreneur studies a problem, identifies its alternatives, compares the
alternatives in terms of cost and benefits implications, and finally chooses
the best alternative.
This
exercise helps in sharpening the decision making skills of an entrepreneur.
Besides, these managerial capabilities are used by entrepreneurs in creating
new technologies and products in place of older technologies and products
resulting in higher performance.
2. Creation of
organisations:
Entrepreneurship
results into creation of organisations when entrepreneurs assemble and
coordinate physical, human and financial resources and direct them towards
achievement of objectives through managerial skills.
3. Improving
standards of living:
By
creating productive organisations, entrepreneurship helps in making a wide
variety of goods and services available to the society which results into
higher standards of living for the people.
Possession
of luxury cars, computers, mobile phones, rapid growth of shopping malls, etc.
are pointers to the rising living standards of people, and all this is due to
the efforts of entrepreneurs.
4. Means of economic
development:
Entrepreneurship
involves creation and use of innovative ideas, maximisation of output from
given resources, development of managerial skills, etc., and all these factors
are so essential for the economic development of a country.
5. Growth of Entrepreneurship
Entrepreneurship
the advent of new venture particularly small ventures in order to materialize
the innovative ideas of the entrepreneurs. Thus, the growth or establishment of
small enterprises ii the specific contribution of entrepreneurship in in every
economy of the world.
6. A Creation of job opportunities
Entrepreneurship
firms contributed a large share of new jobs. It provides entry-level jobs so
necessary fur training or gaining experience for unskilled workers.
7. Innovation
Entrepreneurship
is the incubator of the innovation. Innovation creates disequilibria in the
present state of order.
It goes
beyond discovery and does implementation and commercialization, of innovations.
“Leap frog” innovation, research, and development are being contributed by
entrepreneurship.
8. Impact on community development
A
community is better off if its employment base is diversified among many small
entrepreneurial firms.
It
promotes abundant retail facilities, a higher level of home ownership, fewer
slums, better, sanitation standards and higher expenditure of education,
recreation and religious activities. Thus, entrepreneurship leads to more
stability and a higher quality of community life.
9. Consequence of business failure
The
collapse of large industry almost has irresistible damage to the development of
state and to the state of economy and to the financial condition of the
relevant persons. The incumbents lost their jobs: suppliers and financial
institutions face a crisis of recovery.
Customers
are deprived from goods, services, and the government losses taxes. This could
not happen in the case of failure of entrepreneurship. There shall be no
measurable effect upon the economy and no political repercussions too.
10. Political and economic integration of outsiders
Entrepreneurship
is the most effective way of integrating those who feel disposed and alienated
into the economy. Minorities, migrants and women are safely integrated into
entrepreneurship that will help lo develop a well-composed plural society.
12. Promotes research and development
Entrepreneurship
is innovation and hence the innovated ideas of goods and services have to be
tested by experimentation. Therefore, entrepreneurship provides funds for
research and development with universities and research institutions. This
promotes the general development o:’ research and development in the economy.
TYPES OF ENTERPREURSHIP
1.
Small Business Entrepreneurship
Today, the overwhelming number of entrepreneurs and startups in the United States are still small businesses. There are 5.7 million small businesses in the U.S. They make up 99.7% of all companies and employ 50% of all non-governmental workers.
Today, the overwhelming number of entrepreneurs and startups in the United States are still small businesses. There are 5.7 million small businesses in the U.S. They make up 99.7% of all companies and employ 50% of all non-governmental workers.
2.
. Scalable Startup Entrepreneurship
Unlike small businesses, scalable startups are what Silicon Valley entrepreneurs and their venture investors do. These entrepreneurs start a company knowing from day one that their vision could change the world. They attract investment from equally crazy financial investors – venture capitalists. They hire the best and the brightest. Their job is to search for a repeatable and scalable business model. When they find it, their focus on scale requires even more venture capital to fuel rapid expansion.
Unlike small businesses, scalable startups are what Silicon Valley entrepreneurs and their venture investors do. These entrepreneurs start a company knowing from day one that their vision could change the world. They attract investment from equally crazy financial investors – venture capitalists. They hire the best and the brightest. Their job is to search for a repeatable and scalable business model. When they find it, their focus on scale requires even more venture capital to fuel rapid expansion.
3.
. Large Company Entrepreneurship
Large companies have finite life cycles. Most grow through sustaining innovation, offering new products that are variants around their core products. Changes in customer tastes, new technologies, legislation, new competitors, etc. can create pressure for more disruptive innovation – requiring large companies to create entirely new products sold into new customers in new markets.
Large companies have finite life cycles. Most grow through sustaining innovation, offering new products that are variants around their core products. Changes in customer tastes, new technologies, legislation, new competitors, etc. can create pressure for more disruptive innovation – requiring large companies to create entirely new products sold into new customers in new markets.
4.
4. Social Entrepreneurship
Social entrepreneurs are innovators who focus on creating products and services that solve social needs and problems. But unlike scalable startups their goal is to make the world a better place, not to take market share or to create to wealth for the founders. They may be nonprofit, for-profit, or hybrid.
Social entrepreneurs are innovators who focus on creating products and services that solve social needs and problems. But unlike scalable startups their goal is to make the world a better place, not to take market share or to create to wealth for the founders. They may be nonprofit, for-profit, or hybrid.
CHARACTERISTICS
OF ENTERPREURSHIP
1. Economic and dynamic activity:
Entrepreneurship
is an economic activity because it involves the creation and operation of an
enterprise with a view to creating value or wealth by ensuring optimum
utilisation of scarce resources. Since this value creation activity is
performed continuously in the midst of uncertain business environment,
therefore, entrepreneurship is regarded as a dynamic force.
2. Related to
innovation:
Entrepreneurship
involves a continuous search for new ideas. Entrepreneurship compels an
individual to continuously evaluate the existing modes of business operations
so that more efficient and effective systems can be evolved and adopted.
3. Profit potential:
“Profit
potential is the likely level of return or compensation to the entrepreneur for
taking on the risk of developing an idea into an actual business venture.”
Without profit potential, the efforts of entrepreneurs would remain only an
abstract and a theoretical leisure activity.
4. Risk bearing:
The
essence of entrepreneurship is the ‘willingness to assume risk’ arising out of
the creation and implementation of new ideas. New ideas are always tentative
and their results may not be instantaneous and positive.
Entrepreneurial Process:
Entrepreneurship
is a process, a journey, not the destination; a means, not an end. All the
successful entrepreneurs like Bill Gates (Microsoft), Warren Buffet (Hathaway),
Gordon Moore (Intel) Steve Jobs (Apple Computers), Jack Welch (GE) GD Birla,
Jamshedji Tata and others all went through this process.
ENTERPRISE
a
project or undertaking, typically one that is difficult or requires effort.
Or . a
business or company.
To establish and run an enterprise it is divided into three
parts –
1. the entrepreneurial job,
2. the promotion, and
3. the operation.
TWO
ASPECTS OF ENTREPRENEURIAL PROCESS.
1. Idea Generation:
To
generate an idea, the entrepreneurial process has to pass through three stages:
a. Germination:
This is
like seeding process, not like planting seed. It is more like the natural
seeding. Most creative ideas can be linked to an individual’s interest or
curiosity about a specific problem or area of study.
b. Preparation:
Once
the seed of interest curiosity has taken the shape of a focused idea, creative
people start a search for answers to the problems. Inventors will go on for
setting up laboratories; designers will think of engineering new product ideas
and marketers will study consumer buying habits.
c. Incubation:
This is
a stage where the entrepreneurial process enters the subconscious
intellectualization. The sub-conscious mind joins the unrelated ideas so as to
find a resolution.
2. Feasibility study:
Feasibility
study is done to see if the idea can be commercially viable.
It
passes through two steps:
A. ILLUMINATION:
After
the generation of idea, this is the stage when the idea is thought of as a
realistic creation. The stage of idea blossoming is critical because ideas by
themselves have no meaning.
B. VERIFICATION:
This is
the last thing to verify the idea as realistic and useful for application.
Verification is concerned about practicality to implement an idea and explore
its usefulness to the society and the entrepreneur.
Factors affecting Entrepreneurship:
Entrepreneurship
is a complex phenomenon influenced by the interplay of a wide variety of
factors.
1. Personality
Factors:
Personal
factors, becoming core competencies of entrepreneurs, include:
Proactive
(identification and utilisation of opportunities)
(c)
Perseverance (working against all odds to overcome obstacles and never
complacent with success)
(d)
Problem-solver (conceives new ideas and achieves innovative solutions)
(f)
Self-confidence (takes and sticks to his decisions)
(g)
Self-critical (learning from his mistakes and experiences of others)
(i) Risk-taker (the basic quality).
2. Environmental
factors:
These factors
relate to the conditions in which an entrepreneur has to work. Environmental
factors such as political climate, legal system, economic and social
conditions, market situations, etc. contribute significantly towards the growth
of entrepreneurship. For example, political stability in a country is
absolutely essential for smooth economic activity.
Entrepreneurs
a person who organizes and operates a business
or businesses, taking on greater than normal financial risks in order to do so.
Types of Entrepreneurs:
1. Innovative entrepreneurs:
These
entrepreneurs have the ability to think newer, better and more economical ideas
of business organisation and management. They are the business leaders and
contributors to the economic development of a country.
2. Imitating
entrepreneurs:
These
entrepreneurs are people who follow the path shown by innovative entrepreneurs.
They imitate innovative entrepreneurs because the environment in which they
operate is such that it does not permit them to have creative and innovative
ideas on their own.
3. Fabian
entrepreneurs:
The
dictionary meaning of the term ‘fabian’ is ‘a person seeking victory by delay
rather than by a decisive battle’. Fabian entrepreneurs are those individuals
who do not show initiative in visualising and implementing new ideas and
innovations wait for some development which would motivate them to initiate
unless there is an imminent threat to their very existence.
4. Drone
entrepreneurs:
The
dictionary meaning of the term ‘drone’ is ‘a person who lives on the labor of
others’. Drone entrepreneurs are those individuals who are satisfied with the
existing mode and speed of business activity and show no inclination in gaining
market leadership. In other words, drone entrepreneurs are die-hard
conservatives and even ready to suffer the loss of business.
5. Social Entrepreneur:
Social
entrepreneurs drive social innovation and transformation in various fields
including education, health, human rights, workers’ rights, environment and
enterprise development.
Functions of an Entrepreneur:
The important functions performed by an entrepreneur are listed
below:
1. Innovation:
An
entrepreneur is basically an innovator who tries to develop new technology,
products, markets, etc. Innovation may involve doing new things or doing
existing things differently.
2. Assumption of
Risk:
An
entrepreneur, by definition, is risk taker and not risk shirker. He is always
prepared for assuming losses that may arise on account of new ideas and
projects undertaken by him.
3. Research:
An
entrepreneur is a practical dreamer and does a lot of ground-work before taking
a leap in his ventures. In other words, an entrepreneur finalizes an idea only
after considering a variety of options, analyzing their strengths and
weaknesses by applying analytical techniques, testing their applicability,
supplementing them with empirical findings, and then choosing the best
alternative.
4. Development of
Management Skills:
The
work of an entrepreneur involves the use of managerial skills which he develops
while planning, organizing, staffing, directing, controlling and coordinating
the activities of business. His managerial skills get further strengthened when
he engages himself in establishing equilibrium between his organization and its
environment.
5. Overcoming Resistance to Change:
New innovations are generally opposed by people because it makes them change their existing behavior patterns. An entrepreneur always first tries new ideas at his level.
6. Catalyst of
Economic Development:
An
entrepreneur plays an important role in accelerating the pace of economic
development of a country by discovering new uses of available resources and
maximizing their utilization.
Nine
Characteristics of Successful Entrepreneurs
1. Motivation
Entrepreneurs are enthusiastic, optimistic and future-oriented. They believe they’ll be successful and are willing to risk their resources in pursuit of profit. They have high energy levels and are sometimes impatient. They are always thinking about their business and how to increase their market share. Are you self-motivated enough to do this, and can you stay motivated for extended periods of time? Can you bounce back in the face of challenges?
2. Creativity and Persuasiveness
Successful entrepreneurs have the creative capacity to recognize and pursue opportunities. They possess strong selling skills and are both persuasive and persistent. Are you willing to promote your business tirelessly and look for new ways to get the word out about your product or service?
3. Versatility
Company workers can usually rely on a staff or colleagues to provide service or support. As an entrepreneur, you’ll typically start out as a “solopreneur,” meaning you will be on your own for a while. You may not have the luxury of hiring a support staff initially. Therefore, you will end up wearing several different hats, including secretary, bookkeeper and so on. You need to be mentally prepared to take on all these tasks at the beginning. Can you do that?
4. Superb Business Skills
Entrepreneurs are naturally capable of setting up the internal systems, procedures and processes necessary to operate a business. They are focused on cash flow, sales and revenue at all times. Successful entrepreneurs rely on their business skills, know-how and contacts. Evaluate your current talents and professional network. Will your skills, contacts and experience readily transfer to the business idea you want to pursue?
5. Risk Tolerance
Launching any entrepreneurial venture is risky. Are you willing to assume that risk? You can reduce your risk by thoroughly researching your business concept, industry and market. You can also test your concept on a small scale. Can you get a letter of intent from prospective customers to purchase? If so, do you think customers would actually go through with their transaction?
6. Drive
As an entrepreneur, you are in the driver’s seat, so you must be proactive in your approaches to everything. Are you a doer -- someone willing to take the reins -- or would you rather someone else do things for you?
7. Vision
One of your responsibilities as founder and head of your company is deciding where your business should go. That requires vision. Without it, your boat will be lost at sea. Are you the type of person who looks ahead and can see the big picture?
8. Flexibility and Open-Mindedness
While entrepreneurs need a stead fast vision and direction, they will face a lot of unknowns. You will need to be ready to tweak any initial plans and strategies. New and better ways of doing things may come along as well. Can you be open-minded and flexible in the face of change?
9. Decisiveness
As an entrepreneur, you won’t have room for procrastination or indecision. Not only will these traits stall progress, but they can also cause you to miss crucial opportunities that could move you toward success. Can you make decisions quickly and seize the moment?
Entrepreneurs are enthusiastic, optimistic and future-oriented. They believe they’ll be successful and are willing to risk their resources in pursuit of profit. They have high energy levels and are sometimes impatient. They are always thinking about their business and how to increase their market share. Are you self-motivated enough to do this, and can you stay motivated for extended periods of time? Can you bounce back in the face of challenges?
2. Creativity and Persuasiveness
Successful entrepreneurs have the creative capacity to recognize and pursue opportunities. They possess strong selling skills and are both persuasive and persistent. Are you willing to promote your business tirelessly and look for new ways to get the word out about your product or service?
3. Versatility
Company workers can usually rely on a staff or colleagues to provide service or support. As an entrepreneur, you’ll typically start out as a “solopreneur,” meaning you will be on your own for a while. You may not have the luxury of hiring a support staff initially. Therefore, you will end up wearing several different hats, including secretary, bookkeeper and so on. You need to be mentally prepared to take on all these tasks at the beginning. Can you do that?
4. Superb Business Skills
Entrepreneurs are naturally capable of setting up the internal systems, procedures and processes necessary to operate a business. They are focused on cash flow, sales and revenue at all times. Successful entrepreneurs rely on their business skills, know-how and contacts. Evaluate your current talents and professional network. Will your skills, contacts and experience readily transfer to the business idea you want to pursue?
5. Risk Tolerance
Launching any entrepreneurial venture is risky. Are you willing to assume that risk? You can reduce your risk by thoroughly researching your business concept, industry and market. You can also test your concept on a small scale. Can you get a letter of intent from prospective customers to purchase? If so, do you think customers would actually go through with their transaction?
6. Drive
As an entrepreneur, you are in the driver’s seat, so you must be proactive in your approaches to everything. Are you a doer -- someone willing to take the reins -- or would you rather someone else do things for you?
7. Vision
One of your responsibilities as founder and head of your company is deciding where your business should go. That requires vision. Without it, your boat will be lost at sea. Are you the type of person who looks ahead and can see the big picture?
8. Flexibility and Open-Mindedness
While entrepreneurs need a stead fast vision and direction, they will face a lot of unknowns. You will need to be ready to tweak any initial plans and strategies. New and better ways of doing things may come along as well. Can you be open-minded and flexible in the face of change?
9. Decisiveness
As an entrepreneur, you won’t have room for procrastination or indecision. Not only will these traits stall progress, but they can also cause you to miss crucial opportunities that could move you toward success. Can you make decisions quickly and seize the moment?
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