Entrepreneurship in Perspective

Understanding Entrepreneurship

Entrepreneurship is the concept of developing and managing an enterprise in the hope

of gaining a profit accompanied by certain risks (Entrepreneur Handbook, 2020). The business
idea usually involves a new product or service than an existing business model (Seth, 2019).

An individual who takes part in a new business venture is called an entrepreneur. The
word "entrepreneur" originates from a French verb, entreprendre , which means "to undertake"
(Sobel, 2019). An entrepreneur possesses the following characteristics (Miller, 2020):
● Creative. Successful entrepreneurs have a sense of curiosity that allows them to
continuously seek new ideas and opportunities that often become a feasible business
venture.
● Willingness to undergo further market study. In every opportunity that arises, an
entrepreneur must run tests to determine if the venture is worthwhile to pursue.
● Adaptable. The nature of business is ever-changing. New opportunities and challenges
present themselves at every turn. Therefore, entrepreneurs are expected to be
responsive to change.
● Decisive. Entrepreneurs often make difficult decisions, such as funding, strategy, and
resource allocation. They should be confident in making decisions and can take
responsibility when outcomes turn out to be unfavorable.
● Collaborative. A great entrepreneur does not let their shortcomings hold them. Instead,
they build well-rounded teams that complement their abilities.
● Risk-taker. Entrepreneurs already have an idea of the risks associated with
entrepreneurship. Successful entrepreneurs take steps to minimize these risks.
● Persistent. Failure can be very discomforting for some. A great entrepreneur is someone
who is comfortable with failure and does not easily give up. Entrepreneurs look for
motivation and tend to see failures as opportunities to learn and grow.
● Innovative. Almost everything is already on the market. An entrepreneur can improve or
develop existing products or services to meet the changing needs of the market.

Entrepreneurship in the Modern World

Entrepreneurship is more than the mere creation of a business or a social enterprise.

Although that is certainly an important fact, it is not the complete picture. The characteristics of
seeking opportunities, taking risks beyond security, and having the tenacity to push an idea
through to reality combine into a special perspective that permeates entrepreneurs. Some
people are born with it while others can develop an entrepreneurial mindset. This mindset can
be exhibited inside or outside an organization, in profit or non-profit enterprises and in business
or non-business activities for the purpose of bringing forth creative ideas. Thus,
entrepreneurship is an integrated concept that permeates an individual’s enterprise in an
innovative manner. It is this mindset that has revolutionized the way business and social
ventures are conducted at every level and in every country (Frederick, O'Connor, & Kuratko,
2016).

EXAMPLE: Look at the mindset of the crew of the Starship Enterprise in the famous TV
show Star Trek. They definitely had entrepreneurial qualities. The mission of the Starship
Enterprise was ‘to boldly go where no one has gone before’. This means having the nerve to
face the unknown. ‘Space… the final frontier’ is all about finding new markets. ‘These are the
voyages of the Starship Enterprise’ is all about planning for the future. ‘To explore strange new

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worlds, to seek out new life and new civilizations’ is just like the entrepreneur’s ability to explore,
learn and adapt (Frederick, O'Connor, & Kuratko, 2016).

Today, the word enterprise (or enterprising) is still used as an ‘attitude to life, an attitude
of exploring, of developing, of leading and of taking initiatives’. Enterprise – as in an enterprising
individual – is the process of identifying, developing and bringing a vision to life, be it an
innovative idea or simply a better way of doing something. Enterprise applies not only to
business ventures, but also to political and social decisions (Frederick, O'Connor, & Kuratko,
2016).

English is fortunate in having two (2) complimentary words (some languages do not
make this distinction). Enterprising means ‘marked by imagination, initiative, and readiness to
undertake new projects’. Entrepreneurial means ‘willing to take risks in order to create value’.
Anyone – from an artist to a zoologist – can be enterprising. Entrepreneurship has a more
business connotation. Both terms, whether inside or outside of business, mean that a person is
the sole proprietor of the rest of their life, of their own destiny (Frederick, O'Connor, & Kuratko,
2016).

Role and Significance of Entrepreneurs

Entrepreneurs can change the way people live and work. If successful, their innovations
may improve people's standards of living. In addition to creating wealth from their
entrepreneurial ventures, they also create jobs and the conditions for a prosperous society. The
following are some reasons why entrepreneurs are important to the economy.

1. Entrepreneurs Create New Employment – They create new business, and as a result,
new employment is offered.

2. Entrepreneurs Add to National Income – They generate new wealth. This enables new
markets to be developed, and new wealth created. Additionally, the cascading effect of
increased employment and higher earnings contributes to better national income in higher tax
revenue and higher government spending. The government can use this revenue to invest in
other struggling sectors and human capital.

3. Entrepreneurs Also Create Social Change – Entrepreneurs break away from tradition
and indirectly support freedom by reducing dependence on obsolete systems and technologies.
Overall, this results in an improved quality of life, greater morale, and economic freedom. For
example, the water supply in a water-scarce region will, at times, force people to stop working to
collect water. This will impact their business, productivity, and income. Imagine an innovative,
automatic, low- cost, flow-based pump that automatically fills people's home water containers.

4. Community Development – Entrepreneurs regularly nurture entrepreneurial ventures

by other like-minded individuals. They also invest in community projects and provide financial
support to local charities. This enables further development beyond their own ventures

Basic Concepts, Principles, and Processes in Entrepreneurship

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An entrepreneur is sometimes mistaken to be synonymous with a manager, but the two (2) are
different in many ways. The table below shows the comparison between an entrepreneur and a
manager (Surbhi, 2017).

One of the few misconceptions about the entrepreneur is that they are driven solely by
monetary rewards. Obviously, real entrepreneurs are motivated more than money, although
money is a means to achieve their goals. What drives entrepreneurs is the success of creating
new things, adding value to society, and producing achievements beyond their expectations.

One of the benefits of an entrepreneur is the opportunity to make a difference, which is

not afforded to everyone. Social entrepreneurs seek innovative solutions to solve society's
most perplexing problems. They use their skills and talents not only to create profitable
businesses but to achieve the social, environmental, and economic goals of the society.

The Value Chain Model

Businesses create value by acquiring raw materials and using them to produce
something useful. The value created and captured by a company is the profit margin, which is
the value created minus the cost of creating that value. A value chain is a set of activities that
an organization carries out to create value for its customers. One of the most famous value
chain models is Michael Porter's Value Chain.

The value chain consists of primary and support activities. The primary activities relate
directly to the physical creation, sale, maintenance, and support of a product or service. They
consist of the following:

● Inbound logistics – receiving, storing, and distributing inputs internally.

● Operations – transformation activities that change inputs into outputs that are sold to
customers.
● Outbound logistics – delivering your product or service to your customer.
● Marketing and sales – processes used to persuade clients to purchase from you instead
of your competitors.
● Service – activities related to maintaining the value of your product or service. The
support activities aid the primary functions enumerated. It consists of the following:
● Procurement (purchasing) – getting resources it needs to operate.

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● Human resource management – recruitment, hiring, training, motivating, rewarding, and

retaining workers.

Entrepreneurship Spectrum

Entrepreneurs on starting a business from scratch

Many entrepreneurs start their own business on the idea that they are following their
own vision. As a sole owner, the entrepreneur’s vision for the company will be completely
uncompromised.

Starting a business from scratch enables the entrepreneur to be productive. As a sole

proprietor, the entrepreneur gets the first and only say – without having to run his/her decision
by other parties, there will be no need for team meetings, collaborating, or voting. The
entrepreneur can do what s/he wants and needs to do effectively, and the end results will be up
to his/her high standards.

Entrepreneurs on starting a family business

Entrepreneurs choose to start a family business due to its long-term orientation. Majority
of family businesses aim to maximize the well-being of current and future generations in a
transgenerational perspective. Thus, they focus on potential for growth and investment
projects.

This orientation is the result of several factors: willingness of family members to pass
down to their heirs a healthy and competitive firm and the strong economic and emotional
involvement of family members in the enterprise implies that the firm itself is an asset to be
safeguarded and, at the same time, to be developed (Del Giudice, 2017).

Entrepreneurs on entering a partnership

The idea of partnership for entrepreneurs is that it is a great way to leverage existing
resources between parties, given that the general partnership agreement is not poorly written.

Having partners can mean multiple sources of cash flow, which will undoubtedly benefit
your business during both the start-up and growth phase. The risk of the entrepreneur’s
investment will be spread among other people, which can protect him if the business doesn’t
work out as planned. On a psychological aspect, having partners means that the entrepreneur is
not alone in his endeavors; which in turn, can help the entrepreneur to feel more secure when
the road gets tough.

Other entrepreneurs choose to enter into a partnership to diversify their expertise. By

engaging with partners of different expertise, the entrepreneur can broaden the scope of their
business. This may lead to an expanded customer base, which can increase earning potential.

With a team approach, partners can serve as the entrepreneur’s sounding board when
testing out new ideas, products and services, and markets. Partners can also serve as an
additional source of creativity during brainstorming and problem-solving.

Entrepreneurs on buying an existing business

The idea is that buying an existing business is less risky than starting from scratch,
however expensive it is. In buying a business, the entrepreneur takes over an operation that is

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already generating cash flow and profits. There is already an established customer base,
reputation, and employees who are familiar with all aspects of the business. The entrepreneur
doesn’t have to set up new procedures, systems, and policies since a successful formula for
running the business has already been put in place.

In addition, it is often easier to get financing to buy an existing business than to start a
new one. Bankers and investors generally feel more comfortable dealing with a business that
already has a proven track record. Also, buying an existing business may give the entrepreneur
valuable legal rights such as patents or copyrights, which can prove to be very profitable.

As for franchising, entrepreneurs get to enjoy a support system. In the case of Harsh
Pancholia, founder of zpizza in the United Arab Emirates (UAE), the franchisor (originally from
California, USA) has provided him support while Pancholia is managing the business on his
own. Also, since the franchisor has previously built strong establishments, Pancholia was able
to benefit from the various connections.

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