The exact definition for the term entrepreneur is: an individual who wills to start his/her own business while bearing the risk of new factors involved in success to achieve prosperity and profits. This paper is going to highlight the facts about entrepreneurship and will elaborate to answer the questions: What is entrepreneurship? What are the benefits and drawbacks of being an entrepreneur? What factors can lead to success? Supportive examples are giving for better understanding of the paper along with authentic resources.
Entrepreneurship can be conceptualized as initiating own business. An entrepreneur is one who is prepared to tolerate the risk of a new scheme if there are chances for growth and for profit as well. Economists believe that an entrepreneur is a trendsetter who disseminates his trend. Some believe that entrepreneurs build up new procedures and products that are in current demand and yet short of availability. The concept however was recognized in the 1700s. Since then the meaning of this term has shaped and progressed (Department of State, 2008).
Joseph Schumpeter, an economist of the 20th century critically focused on the changes and turmoil brought by the creativity of an entrepreneur. He acknowledged and demonstrated entrepreneurship as “creative destruction”. This is due to the change that intervenes; the entrepreneur brings out certain strategies that are comparatively new to the previously followed ones. Thus, making these strategies superseded, recognized methods of doing business are demolished by the involvement of innovative and enhanced ways (Backhaus &Schumpeter, 2003).
The thought was further promoted by Peter Drucker, a business expert, who described entrepreneurship as the method of hunting modifications, responding them, and take advantage of such as a new prospect. A glance at transformations in communication – from telegrams and letters to cell phones and emails – demonstrates such ideas (Drucker, 1985).
Entrepreneurship is a vital element for inspiring monetary expansion and employment openings in all cultures hence reducing poverty. Dominant small businesses are one of the chief sources that yield jobs, income raise and reduction of jobless individuals. Hence governmental support for entrepreneurship is a decisive policy for profitable progress.
“Policies to foster entrepreneurship are essential to job creation and economic growth.” Government authorities can offer incentives that motivate entrepreneurs to take risk in endeavoring innovative business enterprises. Among these are regulations to mandate property privileges and to motivate a competitive market system (BIAC, 2003).
The ethnicity of a society also may manipulate how much private enterprises are there contained by it. Diverse ranks of entrepreneurship may curtail from cultural divergence that make entrepreneurship more or less pleasing in person. A society that settles the peak position to those at the peak of hierarchical institutes or individuals with specialized proficiency may deject entrepreneurship. A civilization or strategy that deals with high status to the “self-made” entity is more expected to persuade entrepreneurship (Casson, 2003).
The Benefits of Entrepreneurship
The primary benefits entrepreneurs enjoy include the opportunity to:
Create their own destiny: Entrepreneurs know what they want. It is easier for them to have a vision in mind and setting a target. Entrepreneurs, since looking after every aspect, can analyze and determine their own destiny. If they know the procedures that can lead towards growth and prosperity of business, they can leap towards success more efficiently, developing their future consisting comfort, thus creating destiny.
Make a difference: Entrepreneurs are said to be the creators of business. They offer new ideas, products and schemes that can revolutionize existing business procedures. Such qualities can differentiate an entrepreneur in the market enabling them achieving business opportunities on a higher rate.
Reach their full potential: Since the role of an entrepreneur in business is like a CEO to a company, decisions can be taken in full confidence and restrictions on skill and talent is conquered. An entrepreneur can work with peak potential input to ensure maximum output without any interference.
Generate impressive profits: Working with devotion and authority can produce impeccable results. Profits are likely to increase impressively if decisions are made properly and no lagging is entertained from any department. Success is the result of consistency, Profits will definitely boost upwards if the amount of true work goes high as well.
Contribute to society and be recognized for their efforts: An entrepreneur gets famous and known if he succeeds in business. The business gains maturity and earns respect in the market. Sometime defeated competitors offer a merger to expand businesses. Contribution towards welfare and society helps in gaining more respect and recognition. Sponsoring charity and causes for the good flourish the deference and differentiates the entrepreneur from other competitive candidates.
Do what they enjoy and have fun at it:It’s a simple phenomenon, that since they are interested in working on the specific business, they start it practically. And when this business earns those profits and respect, they tend to believe in it with even more faith and passion. Entrepreneurs enjoy what they do, since the initiative is taken under their own decision (Zimmerer, Wilson, & Scarborough, 2007).
Drawbacks of Entrepreneurship
The most crucial drawbacks to business ownership are:
Uncertainty of income: One of the major drawbacks that an entrepreneur faces is the ambiguity in terms of income. Profits and losses cannot be indomitable prior to the procedures. Sometimes business can grow and earn unlimitedly profiting to unforeseen heights but competition and economic crisis impacts may hinder the growth and productivity lessens, giving loss. Thus income cannot be determined.
Risk of losing invested capital: To start a business, entrepreneurs invest a wholesome amount of money as the capital. Every aspect that needs fulfillment requires money to be spent. If the invested amount is not monitored correctly and the business doesn’t seem to expand or return any good profits, the chances are high of losing the capital since necessary care is required with strict compliance.
Long hours and hard work: Entrepreneurship is one hectic phase of a job. Since output and profits of the business is completely dependent over the entrepreneur himself, there is no such time as 9 to 5 working hours, instead, business which are pre-mature require long hours of dedicated hard-work that become fruitful at the end.
Quality of life until the business gets established: When the business is pre-mature and in the early stages, entrepreneurs are forced to work harder with utmost dedication to nurture the business. The quality of life decreases such as social activities, family get-togethers, ceremonies are forcefully ignored and work has the priority until the time reaches to a point where business gets fully established and working for a committed 8 hour situation is essential enough.
High levels of stress: Health is often affected due to the stress taken over. Working for long hours with concentration and thinking strategies to grow in a critical manner stresses the mind. In order to achieve the much awaited goals, the requirements of the business create anxiety and worry, thus stress to fulfill it is higher.
Complete responsibility: Entrepreneurs are responsible for every aspect of their business. There is a higher level of responsibility since every part of work has to be looked after by the same person. Unlike the nature of a designated job, where one person is assigned to work over one feature only, entrepreneurs have to watch everything carefully with strict compliance and management (Zimmerer, Wilson, & Scarborough, 2007).
The objectives of a successful entrepreneur are based upon planning initially. A significant element of arranging the trade causes knowing the means that can demonstrate achievement. Success factors are short term targets that gauge the company’s success and assist establishing the wellness of progress towards the goals. Exclusion of decisive success factors, there is a risk involved requiring formulating costly changes. An entrepreneur should first jot it down what is required to make business succeed.
A business plan is first of all, created to attract investors if the capital is insufficient. In order to know the feasibility and requirement, it is necessary to pre-plan all the costs before investing the capital. Then marketing and publicizing the product plays an important part. The more publicity of the products takes place, the number of customer increases.
Normally, marketing the product needs appropriate attention and planning. An entrepreneur is required to manage all the aspects at the same time thus management plays another key role. Planning how to manage various features is very essential. Management of inventory as well as human resources is critical. Man power should be executed appropriately. Thus evaluation of every factor reduces the tendency of collapsing due to ignorance (Reyna, 2009).
Furthermore, products should be estimated that whether they are sold profitably or not. If not, strategies that can increase profit should be identified, whether by cost reduction or increase in sale price. Reduction of operating cost should be lowered down continuously. Cutting down the cost in irrelevant requirements and reducing reliance on outsourcing are good aspects to reduce this.
Maintenance of standard is a necessity of every business. If the quality of the product decreases, number of customers decrease too. It is necessary to maintain the high quality of existing products as well as developing new product upon the same standards. Customer feedbacks can help in evaluating the quality as well as knowing the needs of the customer. Customer satisfaction is a vital aspect that helps in achieving success. Retention of valued customer base is important. To do so, high levels of customer satisfaction are required. Giving customers, ‘the extra effort’ increases the chances of their return.
A good customer is like to spread and publicize about the entrepreneur’s product, thus assisting in achieving the targets. Success factors must cover all the chief parts of the trade in order to move further. As a small business owner, entrepreneurs should have adequate understanding about the steps that lead to success significantly (Reyna, 2009).
Findings and Analysis
One of the best examples of entrepreneurship is Bill Gates, who is presently the richest entrepreneur of the world. The life and skills of his, demonstrate the ability of taking risk with confidence. Bill is the co-founder and chair person of Microsoft. He is set to be the most successful entrepreneur since the company he is leading has shadowed its competitors. It can be analyzed by his life that an entrepreneur at initial stages should have a persuasive approach and superior communication skills (Ferriss, 2009).
Another successful example is the second richest person of the world, Warren Buffett. Once again risk taking is involved over here. Warren purchased the company named Berkshire Hathaway, a known company in the textile industry, when it was suffering consecutive losses. The purchase was criticized but Warren’s ambitions took it high again. Today, the company is once again, one of the largest holding companies, making Buffett one of the most successful entrepreneurs of today. He is famous for his biggest charity donation of about $30 billion to the Bill & Melinda Gates Foundation. (Dipendalal, 2009).
Conclusion and Recommendations
It can be analyzed thoroughly that entrepreneurship requires a persuasive and devoted sort of approach to fulfill all the expectations. It can be concluded in such a manner that entrepreneurship may fear people at the initial levels but taking risk is a part of life. The scary initial part has to be carefully harnessed, further it harnesses itself and success becomes the output of it. Entrepreneurship is not rocket science, yet it requires exceptionally developed skills to control and grow businesses. A successful entrepreneur is, who moves in the above defined criteria.
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BIAC. (2003). Growth and Employment: The Future of an Active Society in a Changing World. Stuttgart: BIAC.
Casson, M. (2003). The entrepreneur: an economic theory. Cheltenham: Edward Elgar Publishing Limited.
Department of State, U.S.A. (2008). What is Entrepreneurship. Web.
Dipendalal. (2009). Success Story Warren Buffet. Web.
Drucker, P. (1985). Innovation and entrepreneurship: practice and principles. Oxford: Elsevier Ltd.
Ferriss, T. (2009). Do You Really Know Bill Gates? The Myth of Entrepreneur as Risk Taker. Web.
Reyna, S. (2009). Key Success Factors of Your Small Business. Web.
Zimmerer, T., Wilson, D., & Scarborough, N. (2007). Essentials of Entrepreneurship and Small Business Management 5th Edition. Upper Saddle River, NJ: Prentice Hall.