What is Entrepreneurship? Meaning, Types, Characteristics & its Importance

 

 

Concept of Entrepreneurship

Entrepreneurship is the ability and readiness to develop, organize and run a business enterprise, along with any of its uncertainties in order to make a profit. The most prominent example of entrepreneurship is the starting of new businesses.

What Is EntrepreneurshipIn economics, entrepreneurship connected with land, labour, natural resources and capital can generate a profit. The entrepreneurial vision is defined by discovery and risk-taking and is an indispensable part of a nation’s capacity to succeed in an ever-changing and more competitive global marketplace.

Meaning of Entrepreneur

The entrepreneur is defined as someone who has the ability and desire to establish, administer and succeed in a startup venture along with risk entitled to it, to make profits. The best example of entrepreneurship is the starting of a new business venture. The  entrepreneurs are often known as a source of new ideas or innovators, and bring new ideas in the market by replacing old with a new invention.

It can be classified into small or home business to multinational companies. In economics, the profits that an entrepreneur makes is with a combination of land, natural resources, labour and capital.

In a nutshell, anyone who has the will and determination to start a new company and deals with all the risks that go with it can become an Entrepreneur.

What are the Types of Entrepreneurship?

It is classified into the following types:

Small Business Entrepreneurship-

These businesses are a hairdresser, grocery store, travel agent, consultant, carpenter, plumber, electrician, etc. These people run or own their own business and hire family members or local employee. For them, the profit would be able to feed their family and not making 100 million business or taking over an industry. They fund their business by taking small business loans or loans from friends and family.

Scalable Startup Entrepreneurship-

This start-up entrepreneur starts a business knowing that their vision can change the world. They attract investors who think and encourage people who think out of the box. The research focuses on a scalable business and experimental models, so, they hire the best and the brightest employees. They require more venture capital to fuel and back their project or business.

Large Company Entrepreneurship-

These huge companies have defined life-cycle. Most of these companies grow and sustain by offering new and innovative products that revolve around their main products. The change in technology, customer preferences, new competition, etc., build pressure for large companies to create an innovative product and sell it to the new set of customers in the new market. To cope with the rapid technological changes, the existing organisations either buy innovation enterprises or attempt to construct the product internally.

Social Entrepreneurship-

This type of entrepreneurship focuses on producing product and services that resolve social needs and problems. Their only motto and goal is to work for society and not make any profits.

Characteristics of Entrepreneurship:

Not all entrepreneurs are successful; there are definite characteristics that make entrepreneurship successful. A few of them are mentioned below:

  • Ability to take a risk- Starting any new venture involves a considerable amount of failure risk. Therefore, an entrepreneur needs to be courageous and able to evaluate and take risks, which is an essential part of being an entrepreneur.
  • Innovation- It should be highly innovative to generate new ideas, start a company and earn profits out of it. Change can be the launching of a new product that is new to the market or a process that does the same thing but in a more efficient and economical way.
  • Visionary and Leadership quality- To be successful, the entrepreneur should have a clear vision of his new venture. However, to turn the idea into reality, a lot of resources and employees are required. Here, leadership quality is paramount because leaders impart and guide their employees towards the right path of success.
  • Open-Minded- In a business, every circumstance can be an opportunity and used for the benefit of a company. For example, Paytm recognised the gravity of demonetization and acknowledged the need for online transactions would be more, so it utilised the situation and expanded massively during this time.
  • Flexible- An entrepreneur should be flexible and open to change according to the situation. To be on the top, a businessperson should be equipped to embrace change in a product and service, as and when needed.
  • Know your Product-A company owner should know the product offerings and also be aware of the latest trend in the market. It is essential to know if the available product or service meets the demands of the current market, or whether it is time to tweak it a little. Being able to be accountable and then alter as needed is a vital part of entrepreneurship.

Importance of Entrepreneurship:

  • Creation of Employment- Entrepreneurship generates employment. It provides an entry-level job, required for gaining experience and training for unskilled workers.
  • Innovation- It is the hub of innovation that provides new product ventures, market, technology and quality of goods, etc., and increase the standard of living of people.
  • Impact on Society and Community Development- A society becomes greater if the employment base is large and diversified. It brings about changes in society and promotes facilities like higher expenditure on education, better sanitation, fewer slums, a higher level of homeownership. Therefore, entrepreneurship assists the organisation towards a more stable and high quality of community life.
  • Increase Standard of Living- Entrepreneurship helps to improve the standard of living of a person by increasing the income. The standard of living means, increase in the consumption of various goods and services by a household for a particular period.
  • Supports research and development- New products and services need to be researched and tested before launching in the market. Therefore, an entrepreneur also dispenses finance for research and development with research institutions and universities. This promotes research, general construction, and development in the economy.
 
Qualities of Entrepreneur
 

 Initiative

 
●Entrepreneur must have an innovative aptitude
●Pick the right opportunity, and initiate action
●If he/she does not initiate action at the right time the opportunity may be lost
●Initiative is the key to the success of the venture to a great extent
 
Wide Knowledge
 
●Entrepreneur should have wide knowledge of the economic and non-economic environment
of business
●The market
●Consumer attitudes
●Technology
●In the absence of such adequate knowledge, the decisions taken by him may be poor
●Not contribute to the profitability of his business in the long run.
 
Willingness to assume risk
 
●Entering any venture is full of risks and uncertainties.
●Deal with various kinds of risks and uncertainties efficiently
●The entrepreneur should have willingness and necessary foresightedness to assume risks.
●The quantity and quality of risk taking would determine the quality of business decisions.
 
Open mind and optimistic outlook
 
●Entrepreneur should have an open mind.
●He/she must possess a dynamic and optimistic outlook
●To predict changes in the business environment and respond effectively without delay.
 
Adaptability
 
●The entrepreneur must understand the ground realities of the business environment.
●He/she should be prepared to adapt to the changes taking place in the system.
●Resistance to change and delay in responding
●Lead to losing the opportunity of taking advantage
 
Self-confidence
 
●Achieving success in life, one should have confidence in himself/ herself
●Person who lacks confidence can neither do any work himself/herself
●Nor inspire others to work
●Self-confidence is reflected in courage, enthusiasm and the ability to lead
 
Leadership Qualities
 
●Entrepreneur should possess the qualities of a good leader.
●He/she should have the traits of
●Self-discipline
●Presence of mind
●Sense of justice
●Honour and dignity
●High moral character
 
Orientation towards hard work:
 
●There is no substitute for hard work in life.
●While running a business, one problem or the other may occur.
●The businessmen have to be vigilant about these and find solutions thereof as early as
possible.
●This requires hard work on the part of the entrepreneur.
●He has to put in extra efforts to ensure success of the enterprise started by him.

Entrepreneur – Skills Required for an Entrepreneur

An entrepreneur needs intuition, creative thinking and innovative ability. Entrepreneurs were not born; they learned to become entrepreneurs. They can learn and improve their skills through various training programmes for entrepreneurs.

The following skills are required for an entrepreneur:

1. Conceptual – An entrepreneur has the ability to identify relationships quickly in the midst of complex situations. He identifies problems and begins to work in their solution faster than other people.

2. Technical – A good entrepreneur should have interest to explore new ideas, new technology and new production method. He must have a reasonable level of technical knowledge.

3. Human Relation – An entrepreneur should maintain good relations with his customers and the public. He must also maintain good relations with his employees to motivate them to higher levels of efficiency.

4. Communication – Communication of an entrepreneur must be to the point, crisp and convincing. Communication ability is the secret of the success of most entrepreneurs.

5. Decision-making – It means the ability to choose the correct alternative from a numbers of alternatives. An entrepreneur should have the ability to analyse the various aspects of the business to arrive at a decision.

6. Managerial – An entrepreneur should have the skill to manage the men and other factors of production. He should be able to select, train and maintain the persons composing of labour force.

7. Time Management – Time Management is the act or process of exercising continuous control over time spent on specific activities. This is necessary to increase efficiency or productivity. An entrepreneur must possess this skill to manage the time.

8. Stress Management – Stress management is one of the keys to a happy and successful life in modern society. It is the best way to manage anxiety and maintain overall well-being. Entrepreneur must be able to adopt various mechanisms to control the level of stress.

9. Personality and Individual skill – Impressive personality and individual skill help to develop entrepreneurship. These qualities are inevitable for entrepreneurs since they have to work with officers, engineers, labourers, customers, investors, Govt. officers, etc.

10. Pioneering – Entrepreneurs have the skill to explore into new opportunities. They always like discover new methods of production and new markets. Thus, they are pioneers in their own field.

11. Unification and Organization – An entrepreneur comes in contact with many unions and organizations. He has to arrange many things in many ways and to unite all of them for a common goal. So, he must have unification and organization skills.

12. Computer knowledge – If an entrepreneur is computer literate he can use the computers and software to perform different aspects of his jobs. Computer is a helpful tool for decision-making. Some important applications of the internet are e-mail, telnet, acquiring software and world-wide web.

  • Ability to take a risk- Starting any new venture involves a considerable amount of failure risk. Therefore, an entrepreneur needs to be courageous and able to evaluate and take risks, which is an essential part of being an entrepreneur.
  • Innovation- It should be highly innovative to generate new ideas, start a company and earn profits out of it. Change can be the launching of a new product that is new to the market or a process that does the same thing but in a more efficient and economical way.
  • Visionary and Leadership quality- To be successful, the entrepreneur should have a clear vision of his new venture. However, to turn the idea into reality, a lot of resources and employees are required. Here, leadership quality is paramount because leaders impart and guide their employees towards the right path of success.
  • Open-Minded- In a business, every circumstance can be an opportunity and used for the benefit of a company. For example, Paytm recognised the gravity of demonetization and acknowledged the need for online transactions would be more, so it utilised the situation and expanded massively during this time.
  • Flexible- An entrepreneur should be flexible and open to change according to the situation. To be on the top, a businessperson should be equipped to embrace change in a product and service, as and when needed.
  • Know your Product-A company owner should know the product offerings and also be aware of the latest trend in the market. It is essential to know if the available product or service meets the demands of the current market, or whether it is time to tweak it a little. Being able to be accountable and then alter as needed is a vital part of entrepreneurship.

Problems Faced By Indian Entrepreneurs

 

With the Indian government launching various schemes to promote small scale industries in India, local businesses have been mushrooming all over the country with many startups making huge impacts in the past few years. But it’s not easy, there are abundant problems faced by entrepreneurs.

While companies like Paytm and Flipkart are an example of what a startup can achieve in a few short years, there are certain problems that almost all entrepreneurs face while starting out.

Here are 7 problems faced by entrepreneurs & how to tackle them:

1) Financial & cash flow management

Getting your business funded is one of the main issues that all business face and have to tackle in order to survive.

While you might have initial money saved up to start a business, they don’t survive for long and you cannot just rely on the next sales check to arrive so you can pay the bills and take care of the next step in business.

A steady flow of cash is essential for small business to survive and you always need to have extra funds to take care of rainy and in-between days.

Many entrepreneurs struggle to make ends meet and at times don’t even pay themselves so they can clear the invoices in time.

What you can do is plan your finances better so there are no delayed invoicing and you have enough gap in between getting the money, clearing the invoice and paying your employees (including yourself) salaries.

For this, you need to make sure you have a well-prepared business plan in advance and that includes funds set aside to weather the worst-case scenario.

Remember you are new so you will have limited availability of funds, and thus you have less room for error.

You will also not make a profit right away so have enough funds set aside before you start and add it in your business plan and budget accordingly.

2) Hiring employees & team building

We all have faced interviews at one or other point of our lives and for many, it has been one of the most stressful points in their lives.

While we all have been in the above situation one point or the other, there are very few of us who have conducted interviews and it is equally hard if not more as the majority you have not done it before and thus have no idea how to go about it.

The situation is only more stressful by the fact that you are doing it as a new entrepreneur and thus want to pick that perfect candidate that not only fits your budget but is also proficient at the work they are being hired for.

Picking the right combination team for a startup is equally stressful as you have no idea how the team will work together even if the candidates are right on paper and efficient working alone or on their own.

It is thus advisable that you be exclusive and look beyond resumes and job requirements. When posting jobs requirements be specific about what exactly are you looking for and with what budget and benefits.

Make sure you mention what qualifications candidates must have and what the job duties would be required and what hours and days they would be working.

This will save yourself a ton of time as people who would apply would be aware of the budget and duties while applying.

Once you have a pool of prospects, take them on a company tour and show what exactly would be the environment they would be working in. This will give you and them an idea of what to expect and how they react with your staff will give you an idea of how they gell with your team.

You can also try reaching out to remote areas as workers in small cities and villages often want to move out and once trained can be a great choice for the entrepreneurs.

Further for jobs where a person doesn’t need to be physically present in the office to work, look for skilled workers in other cities and states as this can end up saving you a lot of money that would otherwise be spent on developing a physical office for them.

This will also provide them with an opportunity to work with a company that is based in metros and move out when required.

3) Dealing with the unknown and self-doubt

Every entrepreneur, especially the ones that are just starting out, doubt themselves and often question if their business will work, be profitable and survive with time.

They also often doubt if their product with work and if the customers will accept them.

There is no getting away from these questions and none of them has a solid, reliable answer till you are in that position.

There are many unknown factors and many of your long-term plans often will remain in flux depending on new developments that take place.

Dealing with this volatility is one of the hardest parts of being a new entrepreneur and all you can do is remain calm and deal with them as they come.

Follow and promote work relaxation and instead of getting discouraged motivate yourself and look at your list of goals and tasks to do today and try to achieve them than worry about the future unknown that might or might not happen.

4) Decision-making

One of the hardest and most stressful problems faced by entrepreneurs is decision making.

New entrepreneurs have a harder time making decisions as they often equate even small decisions with how it will impact the company and its budget. Self-doubt also makes them question the decisions they have made already made and if it was the right one.

It’s is only with time that they learn to take hundreds of decisions a day, big and small, without questioning themselves and often facing decision fatigue.

While it will take some time and experience to reach that point, they can start by following the 5 steps of the decision-making process to make crucial decisions.

These are – Identifying their goal, weighing their options, considering the consequences, make the decision and evaluate it before giving it a nod.

For smaller decisions, they can also allocate it to the people they trust and are best suited to that department and would know what works for you the best.

5) Facing Criticism

One of the constant problems faced by entrepreneurs is criticism. Be it about their business ideas, small failures in business decision making or starting the business in the first place.

Even big entrepreneurs like Ratan Tata and NR Narayana Murthy have faced criticism and still face them.

As a new entrepreneur, you might face it and would be constantly warned about the various ways your business can fail. Sometimes these critics might even get personal as they’ll feel jealous of and threatened by you.

As a good entrepreneur, you need to learn to face them head-on and separate the wheat from the chaff.

Basically, you need to look at genuine criticism, evaluate it and fix them so you don’t face it again.

Put aside unhelpful comments and ‘advice’ and use the genuine one to take your business further up.

6) Finding customers

It’s really hard to attract customers for any company that is starting out especially if they are a business with limiting marketing budget.

This problem always plays on every entrepreneur’s mind and the fact that people tend to stick with well-known brands they’re familiar with makes it harder for them to sell their products.

But new companies hold a big advantage over brands and that is their pricing is much cheaper than their rivals.

If they provide a high-quality product at a much cheaper rate than their rival, they will not only be able to attract new customers but also retain their customer who will become loyal to them over time.

7) Time management

When you are starting out with a new business time management might be one of the biggest problems faced by entrepreneurs.

As a newcomer, an entrepreneur has to take up many roles and don as many hats as he can.

He or she has to accomplish a lot in a limited amount of time and thus is always running from pillar to post to take care of things.

While the limited time and funds are something that no one can control, what you can do is have a strict schedule that allocates your time and money to each task.

As a newcomer, you cannot afford to waste time as it will only cost you more in the long run and you thus you need to be smart about allocating each minute.

For this, you need to create a goal list which is divided into weekly goals, monthly goals and annual goals.

Plan your week accordingly and break them down into specific tasks for each day.

When you focus on achieving your daily goals you will automatically reach your weekly goal and in turn your annual goals.

This will also help you keep track of things and let you know where you stand on your business goals.

7) Corruption:

While under no circumstances, corruption can be justified, it is a bitter truth that it is rampant in many government departments. Even private sector is not spared by it. We have to make a collective effort to curb this social evil. As it hampers growth of the business, it is a challenge for budding entrepreneurs.

OTHERS PROBLEMS ARE LISTED BELOW 

1. Bureaucracy

2. Labour

3. Regional Sentiments

4. Grey Market and Counterfeit Goods and 

5. Social Capitals