Meaning of Entrepreneurship
Entrepreneurship is the process of designing and running a new business venture for earning profits. It is a process that brings innovation that is new ideas, products, and services in the market. Entrepreneurship is the ability to create, manage and operate a new business and bears all of its risk with a view to earn profits. A person who develops new business and undertakes all risks and challenges associated with it is termed as Entrepreneur.
Entrepreneurship is defined as an act of looking for an investment and production opportunity, then creating and managing a business venture for earning profits. It involves arranging for materials, labor, land, capital, bringing new techniques and product and recognizing new sources for enterprises. The risk associated with entrepreneurship is high but at the same, it may also provide high rewards to a person starting a venture.
Entrepreneurship results in creativity, innovation, employment opportunities and leads to the overall economic development of the country. Entrepreneurship is of the following kinds: – Small Business Entrepreneurship, Large Company Entrepreneurship, Scalable Startup Entrepreneurship, and Social Entrepreneurship.
Nature of Entrepreneurship
Creation of Enterprise
Entrepreneurship is a process that refers to the creation and running of a new enterprise. It is an activity under which a person called an entrepreneur starts a new venture using a new idea.
Entrepreneurship is an economic activity as it involves creating and running a new business through optimum utilization of all combined resources. It ensures that all scarce resources are efficiently used for deriving better returns in the form of profit.
Innovation and Creativity
It is the process of discovering new ideas and concepts and implementing them in business ventures. Entrepreneurship involves bringing innovation in the market by introducing new products or process that delivers better service.
It is an activity which involves huge risk which every entrepreneur needs to undertake for starting a venture. New ideas developed and implemented by the entrepreneur are uncertain and may result in losses.
Profit earning is the sole objective of an entrepreneur for undertaking risk. Entrepreneurs start a new venture with a view to earning profits.
Entrepreneurship is a process of recognizing and filling the gap between customer needs and available products or services. It focuses on removing the deficiencies from the currently available products to fulfill the needs of customers.
It is an organizing function that brings together different factors of production like land, labor, and capital. Entrepreneurship is concerned with coordinating and managing all resources engaged within the enterprise.
Importance of Entrepreneurship
Development of managerial capabilities
- Self -Contentment: Entrepreneurs have a high commitment towards their goals and they have the caliber to take charge of the situation. It gives opportunity to an individual to contribute towards social goods by his Innovative ways.
- Financial benefits and secured life: There is immense probability of reaping financial towards through better products. Entrepreneurial rewards may surpass the benefits of some of the best paid jobs.
- Social acceptance and recognition: it gives prestige and status to the individual and inspire other innovative minds to take initiatives.
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.
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 phone, rapid growth of shopping malls, etc. are pointers to the rising living standards of people, and all this in due to the efforts of entrepreneurs.
Means of Economic Development:
Entrepreneurship involves creation and use of innovative ideas, maximization of output from given resources, development of managerial skills, etc, and all these factors are very essential for the economic development of a country. It achieves following:
- Job Creation: Increased production activities require additional workforce at all levels of management and for all different streams. Creation of job is a strong indicator of sustainable economic growth.
- Self-reliant economy: Small businesses help individuals to grow financially independent. This in turn lends to the development of a resurgent middle class and a self-reliant economy.
- Export Promotion: Entrepreneurs can attempt to penetrate new markets and establish themselves as global brands.
Characteristics of Entrepreneurship
Ability to take Risk
Willingness to undertake risk is the most important characteristic of entrepreneurship. Starting a new enterprise involves a lot of risk such as more chances of failure and therefore entrepreneur should properly analyze such risk.
Entrepreneurs should have a clear vision of his new venture for converting an idea into reality. He should have proper planning regarding future activities for the attainment of desired results.
Good entrepreneurs should properly analyze all prevailing situations in the market. They should realize that every situation can be treated as an opportunity for business. Such opportunities should be grabbed as early as possible for the betterment of the business.
Entrepreneurship is a goal-oriented activity. Entrepreneurs create and start a new venture with the purpose of earning profits by satisfying the needs of customers.
Entrepreneurs should be flexible and should change according to the prevailing situations in the market. Businessmen should consider and bring all required changes in their products or service as and when required from time to time.
Confident and well Informed
It is important for entrepreneurs to be confident about his ideas and abilities. He should have proper knowledge regarding the industry and the environment. Proper understanding of all business policies will help in taking the right decision at the right time.
Elements of Entrepreneurship
Economic and Dynamic Activity
Entrepreneurship is an economic activity as it entails the creation and operation of an enterprise with a view of creating value or wealth by ensuring optimum utilization of scarce resources. These activities are performed on a continuous basis in an uncertain environment; hence it is regarded as a dynamic force.
Associated to Innovation
Entrepreneurship deeply involves a search for new ideas on a continuous basis. It forces an individual to evaluate the existing modes of business operations continuously so as to evolve and adopt the more efficient and effective system.
Profit potential is the likely level of return to the entrepreneur for captivating on the risk of developing an idea into an actual business venture. Without profit perspectives, the efforts of entrepreneurs would remain only a non-figurative and merely theoretical activity.
Creative and Purposeful Activity
Entrepreneurship is a creative and purposeful activity. It is a creative answer to the changing environment. Earning profit may not be sole objective but the introduction of something creative and new is the purpose of entrepreneurship.
The core 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. An entrepreneur has to have the patience to see his effort bear fruit. In the intervening period, an entrepreneur has to assume the risk.