Principles of Entrepreneurship
What is meant by entrepreneurship? The concept of entrepreneurship was first es-tablished in the 1700s, and the meaning has evolved ever since. Many simply equate it with starting one’s own business. Most economists believe it is more than that.
To some economists, the entrepreneur is one who is willing to bear the risk of a new venture if there is a significant chance for profit. Others emphasize the entrepreneur’s role as an innovator who markets his innovation. Still other economists say that entrepre-neurs develop new goods or processes that the marketdemands and are not currently being supplied.In the 20th century, economist Joseph Schumpeter(1883-1950) focused on how the entrepreneur’s drive for innovation and improvement creates upheaval and change. Schumpeter viewed entrepreneurship as aforce of “creative destruction.” The entrepreneur car-ries out “new combinations,” thereby helping render old industries obsolete. Established ways of doing business are destroyed by the creation of new and better ways to do them.
Business expert Peter Drucker (1909-2005) took thisidea further, describing the entrepreneur as some-one who actually searches for change, responds to it,and exploits change as an opportunity. A quick look at changes in communications—from typewriters to personal computers to the Internet—illustrates these
ideas.
Most economists today agree that entrepreneurship is a necessary ingredient for stimulating economic growth and employment opportunities in all societ- ies. In the developing world, successful small busi-nesses are the primary engines of job creation, income growth, and poverty reduction. Therefore, government support for entrepreneurship is a crucial strat-egy for economic development.
As the Business and Industry Advisory Committee to the Organization for Economic Cooperation and Development (OECD) said in 2003, “Policies to fos-ter entrepreneurship are essential to job creation and economic growth.” Government officials can provide incentives that encourage entrepreneurs to risk at-tempting new ventures. Among these are laws to en-force property rights and to encourage a competitive
market system. The culture of a community also may influence howmuch entrepreneurship there is within it. Different levels of entrepreneurship may stem from cultural differences that make entrepreneurship more or lessrewarding personally. A community that accords thehighest status to those at the top of hierarchical or- ganizations or those with professional expertise may discourage entrepreneurship. A culture or policy that
accords high status to the “self-made” individual is more likely to encourage entrepreneurship.
Who can become an entrepreneur? There is no one definitive profile. Successful entrepreneurs come in various ages, income levels, gender, and race. They differ in education and experience. But research indicates that most successful entrepreneurs share certain personal attributes, includ-ing: creativity,dedication, determination, flexibility, leadership, passion, self-confidence, and “smarts.”
- Creativity is the spark that drives the developmentof new products or services or ways to do business. It is the push for innovation and improvement. It is continuous learning, questioning, and thinking outside of prescribed formulas.
- Dedication is what motivates the entrepreneur to work hard, 12 hours a day or more, even seven days a week, especially in the beginning, to get the en-deavor off the ground. Planning and ideas must bejoined by hard work to succeed. Dedication makesit happen.
- Determination is the extremely strong desire to achieve success. It includes persistence and theability to bounce back after rough times. It per-suades the entrepreneur to make the 10th phonecall, after nine have yielded nothing. For the true entrepreneur, money is not the motivation. Success is the motivator; money is the reward.
- Flexibility is the ability to move quickly in responseto changing market needs. It is being true to a dreamwhile also being mindful of market realities. A story is told about an entrepreneur who started a fancy shop selling only French pastries. But customers wanted to buy muffins as well. Rather than risking he loss of these customers, the entrepreneur modified her vision to accommodate these needs.
- Leadership is the ability to create rules and to set goals. It is the capacity to follow through to see that rules are followed and goals are accomplished.
- Passion is what gets entrepreneurs started and keeps them there. It gives entrepreneurs the ability to convince others to believe in their vision. It can’t substitute for planning, but it will help them to stay focused and to get others to look at their plans.
- Self-confidence comes from thorough planning, which reduces uncertainty and the level of risk. Italso comes from expertise. Self-confidence gives the entrepreneur the ability to listen without being easily swayed or intimidated.Smarts” consists of common sense joined withknowledge or experience in a related business or endeavor. The former gives a person good instincts, the latter, expertise. Many people have smarts they don’t recognize. A person who successfully keeps a household on a budget has organizational and financial skills. Employment, education, and life experiences all contribute to smarts..Every entrepreneur has these qualities in different de-grees. But what if a person lacks one or more? Many skills can be learned. Or, someone can be hired who has strengths that the entrepreneur lacks. The most important strategy is to be aware of strengths and to build on them.(U.S. Department of State/Bureau of International Information Programs )
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