Importance of entrepreneurship

 Entrepreneurs create jobs: Without entrepreneurs, jobs wouldn’t exist. Entrepreneurs take
on the risk to employ themselves. Their ambition to continue their business’ growth
eventually leads to the creation of new jobs. As their business continues to grow, even more
jobs are created. Thus, lowering unemployment rates while helping people feed their
families.

 Entrepreneurs create change: Entrepreneurs dream big so naturally some of their ideas will
make worldwide change. They might create a new product that solves a burning problem or
take on the challenge to explore something never explored before. Many believe in
improving the world with their products, ideas or businesses.

 Entrepreneurs give to society: While some have this notion of the rich being evil and
greedy, they often do more for the greater good than the average person. They make more
money and thus pay more in taxes which helps fund social services. Entrepreneurs are some
of the biggest donors to charities and non-profits for various causes. Some seek to invest
their money in creating solutions to help poorer communities have access to things we take
for granted like clean drinking water and good health care.

 Entrepreneurs add to national income: Entrepreneurship generates new wealth in an

economy. New ideas and improved products or services from entrepreneurs allow for the
growth of new markets and new wealth to be created in an economy. Adding to that,
increased level of employment and earnings add to the national income.

Here are a few of the reasons why people become entrepreneurs:

 To change the world: Many entrepreneurs strive to make the world better. Whether
entrepreneurs believe in space exploration, eliminating poverty or creating a practical
but game-changing product, they ultimately build a brand in service of others. Some
entrepreneurs use their business as a way to raise capital quickly to funnel into their
noble causes. To social entrepreneurs, building an empire is about creating a better
world for everyone.
 They don’t want a boss: Entrepreneurs often struggle with having a boss. They often
feel suffocated, restricted and held back. Some entrepreneurs may feel that they have a
more effective way of doing things. Others may dislike the lack of creative freedom.
Ultimately, they become attracted to entrepreneurship to succeed on their own terms.
Being the boss can be more fulfilling than having one. Check out 10 Obvious Signs You
Should Be Working for Yourself.
 They want flexible hours: Entrepreneurship is often popular around those who need
flexible hours. Many people with disabilities often enjoy entrepreneurship as it allows
them to work when they’re able to. Parents with young children might also prefer
entrepreneurship as it allows them to raise young children at home or pick them up
from school without having to feel guilty about it. Students may also like the flexibility of
entrepreneurship as their course workload might not allow them to work standard
office hours.
 They want to work from anywhere: Along with flexibility in working hours,
entrepreneurship is popular among those who don’t want to be tied down to a specific
location. Entrepreneurs might not want to work from the same place every single day, as
it might get boring for them. So, if you’re looking for the freedom to work from
anywhere in the world, maybe the entrepreneur lifestyle is the right one for you.
  They’re risk-takers: Calculated risk taking and entrepreneurship go hand in hand.
Entrepreneurs don’t apply to jobs, they create them. With that comes risk. Whether it’s
the financial risk of starting your first brand or the risk from not knowing what to
expect, business is risky. Entrepreneurs are often taking risks by trying things the
average person won’t, to do things the average person can’t.
 They can’t get a job: Many stumbles into entrepreneurship when they can’t get a job.
Getting fired, a lack of experience or a criminal record can prevent the average person
from getting a job when they’re desperate. Instead of being defeated by their situation,
they create new opportunities for themselves. A new graduate might start an online
store the summer after graduation to build up their resume. A parent who is seasonally
laid off each winter might start a business to ensure they can continue feeding their
family while keeping a roof over their heads.
 They don’t fit into the corporate environment: Entrepreneurs don’t often thrive in
corporate environments. It’s often very restricting for their growth. They may dislike the
lack of control they have in their role or the office politics. In general, you can spot an
entrepreneur in a corporate environment as they’re usually trying to gain more control
in their role and learning their co-workers responsibilities to better understand how
everything fits together.
 They’re curious: Entrepreneurs love finding out the answer to the question, ‘what will
happen if…’ They’re experimental. Entrepreneurs love learning. They regularly
read business books to advance their knowledge. So naturally, entrepreneurship appeals
to them because doing allows them to learn the most in the shortest amount of time.
Their curiosity allows their continued growth.
 They’re ambitious: Those who love reaching difficult goals and milestones are made to
be entrepreneurs. There’s no limit to how much an entrepreneur can make and so they
can always work to achieve higher levels of greatness. Since there’s no limit to what they
can achieve, entrepreneurs constantly find themselves growing and achieving more than
they ever imagined. When obstacles get presented in front of them, they find the
workaround to their goal. Entrepreneurs are unstoppable.

What is Entrepreneurship and Who is an Entrepreneur?

We often hear that so and so is an entrepreneur who has started his or her own business. It is also
the case that when we hear the term entrepreneur, we tend to associate it with a person who has or
is starting their own ventures or in other words, striking it on their own. This is indeed the case as
the formal definition of Entrepreneurship is that it is the process of starting a business or an
organization for profit or for social needs. We have used the phrase for profit or for social needs to
delineate and separate the commercial entrepreneurship from social and charitable
entrepreneurship. After defining entrepreneurship, it is now time to define who an entrepreneur is
and what he or she does.

An entrepreneur is someone who develops a business model, acquires the necessary physical and
human capital to start a new venture, and operationalizes it and is responsible for its success or
failure. Note the emphasis of the phrase responsible for success or failure as the entrepreneur is
distinct from the professional manager in the sense that the former either invests his or her own
resources or raises capital from external sources and thus takes the blame for the failure as well as
reaps the rewards in case of success whereas the latter or the professional manager does the job
and the work assigned to him or her for a monetary consideration. In other words, the entrepreneur
is the risk taker and an innovator in addition to being a creator of new enterprises whereas the
professional manager is simply the executor.
Attributes of Entrepreneurs

Moving to the skills and capabilities that an entrepreneur needs to have, first and foremost, he or
she has to be an innovator who has a game changing idea or a potentially new concept that can
succeed in the crowded marketplace. Note that investors usually tend to invest in ideas and
concepts which they feel would generate adequate returns for their capital and investments and
hence, the entrepreneur needs to have a truly innovative idea for a new venture.

Leadership Qualities

Apart from this, the entrepreneur needs to have excellent organizational and people management
skills as he or she has to build the organization or the venture from scratch and has to bond with his
or her employees as well as vibe well with the other stakeholders to ensure success of the venture.

Further, the entrepreneur needs to be a leader who can inspire his or her employees as well as be a
visionary and a person with a sense of mission as it is important that the entrepreneur motivates
and drives the venture. This means that leadership, values, team building skills, and managerial
abilities are the key skills and attributes that an entrepreneur needs to have.

Creative Destruction and Entrepreneurship

We often hear the term creative destruction being spoken about when talking about how some
companies fade away whereas others succeed as well as maintain their leadership position in the
marketplace. Creative destruction refers to the replacement of inferior products and companies by
more efficient, innovative, and creative ones wherein the capitalist market-based ecosystem
ensures that only the best and brightest survive whereas others are blown away by the gales of
creative destruction. In other words, entrepreneurs with game changing ideas and the skills and
attributes that are needed to succeed ensure that their products, brands, and ventures take market
share away from existing companies that are either not creating values or are simply inefficient and
stuck in a time warp wherein they are unable to see the writing on the wall. Therefore, this process
of destroying the old and the inefficient through newer and creative ideas is referred to as creative
destruction which is often what the entrepreneur does when he or she launches a new venture.

An Entrepreneur is a Risk Taker

We have discussed what entrepreneurship is and the skills and attributes needed by entrepreneurs
along with how they engage and indulge in creative destruction. This does not mean that all
entrepreneurs are successful as the fact that they can become victims of creative destruction as well
as due to lack of the other traits means that a majority of new ventures do not survive past the one-
year mark of their existence. Now, when ventures fail, the obvious question is who takes the blame
for the failure and whose money is being lost. The answer is that the entrepreneur puts his or her
own money or raises capital from angel investors and venture capitalists which means in case the
venture goes belly up, the entrepreneur and the investors lose money. Note that as mentioned
earlier, the employees and the professional managers lose their jobs and unless they are partners in
the venture, their money is not at stake. Therefore, this means that the entrepreneur is the risk
taker in the venture which means that the success or failure of the firm reflects on the entrepreneur.

Some Famous Entrepreneurs

Given this basic introduction to entrepreneurship, we can now turn to some famous examples of
entrepreneurs who have succeeded despite heavy odds because they had game changing ideas and
more importantly, they also had the necessary traits and skills that would make them legendary. For
instance, both the founder of Microsoft, Bill Gates, and the late Steve Jobs, the founder of Apple,
were college dropouts though their eventual success meant that they had not only truly innovative
ideas, but they were also ready to strike it out for the longer term and hang on when the going got
tough. Even the founder of Facebook, Mark Zuckerberg, as well as Google’s Larry Paige and Sergey
Brian can be considered as truly revolutionary entrepreneurs. What all these legends have in
common is that they had the vision and the sense of mission that they were going to change the
world and with hard work, perseverance, and a nurturing ecosystem, they were able to self-
actualizes themselves.

Entrepreneurship Needs a Nurturing Ecosystem

Finally, note the use of the term nurturing ecosystem. This means that just as entrepreneurs cannot
succeed if they lack the necessary attributes, they cannot succeed even having them but living in an
environment or a country that does not encourage risk or tolerate failure and more importantly, is
unable to provide them with the monetary and human capital needed for success. This means that
the United States remains the preeminent country for entrepreneurship as it has the ecosystem
needed for these entrepreneurs to succeed whereas in many countries, it is often impossible or
difficult to find funding, work through red tape, and ensure that the environmental factors do not
inhibit entrepreneurship.

Elements of entrepreneurship
Innovation

Innovation, i.e. doing something new or something different is a necessary condition to be called a
person as an entrepreneur. The entrepreneurs are constantly on the lookout to do something
different and unique to meet the requirements of the customers. They may or may not be inventors
of new products or new methods of production but they possess the ability to foresee the possibility
of making use of the inventions for their enterprises.

Innovation is the process of doing new things. This distinction is important. While creativity relates
to the ability to conceive, the innovation is doing new things. Ideas have little value until they are
converted into useful products or services. Innovation transforms creative ideas into useful
applications. Hence, creativity is a pre-requisite to innovation.

As per Schumpeter a person is an entrepreneur only when he is engaged in innovative

behaviour. This innovative behaviour is an entrepreneurial function. According to Schumpeter,
entrepreneurship is a creative activity. An entrepreneur is an innovator who introduces something
new in an economy. Entrepreneurship is doing things that are generally not done in the ordinary
course of business. Innovation may be in:

 Introducing a new manufacturing process that has not yet been tested and commercially
exploited.

 Introduction of a new product with which the consumers are not familiar or introducing a
new quality in an existing product.

 Locating a new source of raw material or semi-finished product that was not exploited
earlier.
  Opening a new market, hitherto unexploited, where the company products were not sold
earlier.

 Developing a new combination of means of production.

Risk bearing

Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a
predetermined business or Industrial objective. The capacity to take risk independently and
individually with a view to making profits and seizing the opportunity to make more earnings in the
market-oriented economy is the dominant characteristic of modern entrepreneurship. In fact he
needs to be a risk taker, not risk avoider. His risk bearing ability enables him even if he fails in one
succeed.

Entrepreneurship is a process in which the entrepreneur establishes new jobs and firms, new
Creative and growing organizations associated with risk – taking by new and creative ideas and
entrepreneurship identification of the new opportunities and resources mobilization. It results in
introducing a new product or service to society. In Britain encyclopaedia entrepreneur means “a
person who organizes and manages a job or economic association and receives its risks”

The Japanese proverb says “Fall seven times, stand up eight”. Though the term entrepreneur is often
used interchangeably with entrepreneurship, yet they are conceptually different. The relationship
between the two is just like the two sides of the same coin. Thus, entrepreneurship is concerned
with the performance and co-ordination of the entrepreneurial functions. This also means that
entrepreneur precedes entrepreneurship.