An entrepreneur is a person who designs, launches and runs a business. The endeavours taken by these mavericks are significant for the overall development of the society and an economy.
The need of entrepreneurship is deep-rooted for the holistic development of a country. Entrepreneurs form the foundation of development and the benefits of this development are the generation of employment opportunities, increase of income in hand, improve in lifestyle, more savings, better revenue generated for the government through taxes, duties, a rise in economy’s GDP, etc.
In this article, we will look at different aspects of entrepreneurship like what is it, the need of entrepreneurship, the typical characteristics of entrepreneurship, and the various type of entrepreneurs.
Concept of Entrepreneurship
Entrepreneurship is the process that an entrepreneur follows for setting up a new venture. It starts with the generation of an idea and continues throughout the life of a business. It involves innovation, dedication, risk, and profits.
Characteristics of Entrepreneurship
Society is always in need of entrepreneurship as entrepreneurs are the people who are the driving force.
Entrepreneurship can be characterized by the following:
1. Related to Monetary Activity
Entrepreneurship deals with monetary activities. The process involves capital investment in forms of cash and stakes and generation of results in the form of profit or loss. It adds value to society by generating employment, which also revolves around monetary gains. There are other advantages of entrepreneurship, but none of the activities or the fruits can either be conducted or cherished without the involvement of money.
2. Dynamic in Nature
Entrepreneurship is not solely dependent on the life of one person. An entrepreneur and entrepreneurship are two separate legal entity, and even after the death of the entrepreneur, the process might continue. Therefore, entrepreneurship is considered as dynamic in nature.
3. Encourages Generation of New Ideas
Entrepreneurship is the continuous process of generating a new idea. It compels the entrepreneur to think and to stretch himself beyond the present abilities. A person has to be analytical, evaluate current scenarios and generate new ideas for the betterment of the business. An entrepreneur cannot stop thinking of new solutions and options if he wants his company to flourish.
4. Ability to Generate Profit
An entrepreneur involves himself in a business only when he can foresee some benefits from it. While the need of entrepreneurship is great in the society, it is important that it can add value to it and in the entrepreneur’s life. If a business does not generate profit, then it will not be able to sustain in the market and is considered as an abstract idea.
5. Involves Risk
Any new idea involves risk. Whenever a person enters into a business or ‘untested’ venture, he has to be prepared to encounter enormous risk. To overcome the risks and to start cherishing the fruits of efforts, the entrepreneur needs to be patient and has to give the idea the time to blossom. Without hard work, dedication, patience, and risk, entrepreneurship can never succeed. Many a time, ideas do not work due to change in various external factors and then the entrepreneur might need to start afresh, or he might have to think of other ideas to revive his business or to ensure that it starts generating the desired results. Moreover, a continuous up and down keeps happening in a business, so the entrepreneur needs to be prepared for all kinds of scenarios.
6. Perseverance and Long-Term
Entrepreneurship starts with the generation of an idea but to the earn profits from it or to ensure that it starts adding value to humanity, an entrepreneur needs to believe in the idea and stick along. Entrepreneurship is not the result of one day nor is a short-term process. It is a continuous process; initially, the entrepreneur needs to think of a new idea to start his business and then he will have to constantly think of new ideas to ensure that his business runs smoothly and is a regular source of income. Moreover, the chances are high that the results of entrepreneurship will not be immediate.
Entrepreneurship is the journey that an entrepreneur walk through, and it is not the end of the results that he wants to derive from it. It is the continuous efforts that the entrepreneur puts in. Every top business goes through the rigorous process of entrepreneurship. While the need of entrepreneurship is high in the society, the process is pretty tedious.
1. Generation of Idea
Everything starts with an idea. It might come to an entrepreneur form something he sees or from some challenge that makes him think of a solution. An entrepreneur is born when he can start to think out of the box and deal with current problems more analytically. However, it is not necessary that all ideas will conceptualize. Therefore, the next step is highly vital.
After the idea, the entrepreneur needs to confirm the feasibility of the same. Every day thousands of ideas come up, but not all have the tenacity to convert it into entrepreneurship. It is said that the maximum of the businesses cannot survive through the first year and some of the best ideas cannot sustain beyond 7 years. So, it is very important the conceptualization of the idea is done in a very constructive and organized manner. The entrepreneur needs to study the market thoroughly. Study the advantages and disadvantages of the idea, the ability of its generating profits, the time span it will require to generate revenue form the same, the political and business laws surrounding it. They need to understand the need for the idea among people and the way he is going to promote it for their benefits.
The need of entrepreneurship is to build his network, meet people and other business owners to understand the process, without which it is tough to give clarity to an idea. He will have to visit court, government offices to understand the terms and conditions and ensure that he is within the periphery of the laws.
3. Planning Phase
Once the basic structure is in place, the next step is to plan things like:
- Capital- land, building, cash, bank finances, etc.
- Government approvals and certificates for running a business.
- Ensuring that the industry or business do not cause harm to the civilization and selecting of location accordingly.
- Property or land.
- Transport, electricity, and water.
- Types of machinery wherever required.
- Manpower, and raw material.
4. Implementation Phase
Once the planning phase is over, now comes action time!
Some of the activities which are the need of entrepreneurship in the implementation phase are as follows:
- Arranging capital either in the form of cash, stocks, or loan.
- Procurement of land, and building the business space or purchasing/renting an already existing office space.
- Hiring human resources and arranging other raw materials.
- Getting the permission letters from the required office and authorities.
- Making arrangements of the water line, electricity, connectivity.
- Starting the business.
During the implementation phase, the real value starts generating, and the actual threats come up. Therefore, it is a very challenging phase as during this phase the idea starts getting recognized.
5. Managing and Continuation Phase
We know that entrepreneurship is a continuous process and it does not end with implementation. An entrepreneur needs to ensure the smooth functioning of the same. He has to:
- Be constantly aware of the dynamic market, laws, and regulations.
- Manage his stakeholders, both internal and external.
- Be aware of the technological advancement for the benefit of the business.
- Market and promote the business.
Importance of Entrepreneurship
There is various need of entrepreneurship. An entrepreneur not only adds monetary value to the economy but it helps in the overall development of the people residing in it.
Entrepreneurship helps a person to realize his abilities and helps him grow. Being a lifelong process, it takes an individual through various phases. It brings out his managerial abilities, helps him to enhance his skills, imbibes him with patience, gives him the courage to take the risk, and teaches him to deal with problems more productively.
2. Generates Employment
Entrepreneurship cannot survive on the hard work of the only person. It starts with a person but to make it successful, the support from other members are required. Human resource is a key requirement of any business. When a business grows, more and more labour is required, which in turn generates employment.
3. Increases the Per Capita Income
More employment means more income and improves in the standard of living. This, in turn, increases the average income of a household and thus have a remarkable benefit at the macro level.
4. Development of the Society
Through the creation of new service and products, entrepreneurship adds a lot of value to the overall development of society. When a new product is launched, it generates the need for complementary good and services and also helps in increasing the standard of living.
5. Economic Development
Entrepreneurship requires the generation of new and inventive ideas, maximization of production from available capitals, employment, improvement of skills; and all these aspects are crucial for the development of an economy. An economy can grow only when it has entrepreneurs and risk takers.
Types of Entrepreneurs
Depending on the idea and the abilities of the entrepreneurship, there is majorly four type of entrepreneurs:
1. Inventive Entrepreneurs
These entrepreneurs think of ideas beyond the existing ones. They have the ability to create from scratch, and they are the business leaders of the society. They look at a problem and try to find the solution, not from the ones available, but they aim at creating a solution. These types of individuals are mostly found in developed countries, or they already have financial stability as the risk involved is much higher.
Since it is a new concept, nothing about is known and thus success can also not be weighed.
2. Replicating Entrepreneurs
These entrepreneurs take the idea from an existing business module and implement it in his business plan. They study earlier business plans, their success stories, and their hurdles and then draw their business strategy accordingly. While they also take a risk as not all business do not become successful, but it is more weighed. Such type of entrepreneurs is mostly found in developing and underdeveloped countries. They tend to copy the idea of others and modify it according to their abilities and try to generate profit from the same.
3. Social Entrepreneurs
These entrepreneurs primary focus is to add value to society. While a business cannot run without monetary support, these entrepreneurs primary focus is the society’s benefit with profit being the secondary focus. They try to eradicate superstition and injustice from the society and help in the upliftment of the backward and deprived people.
4. Traditional Entrepreneurs
These types of entrepreneurs are not the initiators, but they are the one who manages and develops an already existing business. They utilize their ideas and skills for the growth of the business as the business is already setup for them. In most cases, these are family businesses and has been there through generations. While these entrepreneurs do not have to create something from scratch, they have to be very dynamic and vibrant to align the entrepreneurship with the existing market scenarios
2019 has been a great year for India with more and more youngsters showing keenness in venturing into the unorthodox modes of earning. People are thinking beyond one source of income, and this is encouraging them to put on their thinking cap, and their individualistic nature is boosting them to be entrepreneurs. There has been a rise in the need of entrepreneurship as people are trying to be innovative and not simple followers. There has been a shift in the market, and this could happen only because there has been a shift in the mindset of the citizens and growth in the economy.
An idea does make a difference if it is executed in the best possible ways.