ENTREPRENEURSHIP
Meaning and Definition of Entrepreneurship
It will not be less than correct to mention that the terms 'entrepreneur and 'entrepreneurship' are the two sides of the same coin. Therefore, like the term 'entrepreneur', the term 'entrepreneurship' is also an elusive concept. Hence, it is also defined differently by different authors) While some call entrepreneurship as, 'risk-bearing', others view it as 'innovating', and yet others consider it 'thrill-seeking In a holistic sense, entrepreneurship is the dynamic process of creating incremental wealth by individuals through recognition of business opportunity taking the necessary initiative in the face of risk and uncertainty by ensuring and allocating the necessary skills and resources to bring a business idea to fruition. In a sense, entrepreneurship refers to the functions performed by an entrepreneur in establishing and running an enterprise. Thus, the concept of entrepreneurship can best be expressed as a set of attributes an entrepreneur possesses and practices the same to establish and run the enterprise.
Though the term 'entrepreneur' is often used interchangeably with entrepreneurship, yet these are conceptually different. The relationship between the two is just like the two sides of the same coin as depicted in the following Table
Relationship between Entrepreneur and Entrepreneurship
|
Entrepreneur |
Entrepreneurship |
|
Person Organiser Innovator Risk-bearer Motivator Creator Visualiser Leader Imitator Decision
Maker Initiator
|
Process Organisation Innovation Risk-bearing Motivation Creation Vision Leadership Imitation Decision
Making Initiation
|
The above table reveals that entrepreneur precedes entrepreneurship which precedes enterprise. It can simply be put as:
Characteristics of Entrepreneurship
The salient characteristics of of entrepreneurship are mentioned as follows:
1. Enterprise Creating Ability: Entrepreneurship is primarily concerned with that everyone the creation and operation of an enterprise. This is not simple and can do; Only those with ability to create enterprise can create it.
2. Organising: Another important characteristic of entrepreneurship is organizing which implies bringing the various factors of production together at a place, Besides, entrepreneurship also involves co-ordination and control over the factors of production and efforts of people so that the set objectives are achieved satisfactorily.
3. Risk Bearing: Risk and entrepreneurship are inseparable from each other. Entrepreneurship involves buying of factors of production such as land, labour, capital, machinery, etc. at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future. The 'uncertain price' involves risk.
4. Managing: Entrepreneurship also involves the managerial functions such as preparing production plans; deciding what, when and where to produce; arranging the required inputs, funds, equipment; organizing sales; and looking after the human resource management.,
5. Gap Filling: Entrepreneurship fills the gap between the human needs and the available products and services. In other words, entrepreneurship identifies the gap in terms of excess of demand over supply of products and/or services and, then, tries to increase supply by producing goods and offering services to meet the demands to the maximum extent possible. This enables the entrepreneur to earn profit and create wealth.
Advantages and Disadvantage of Entrepreneurship
There are both advantages and disadvantages to entrepreneurship, i.e., self- employment. The entrepreneur must be aware of these before starting a business.
Entrepreneurship
- Opportunity to Enjoy Autonomy 1. Uncertainty of Income
- Opportunity to Reach One's Full Potential 2. Personal Sacrifice
- Opportunity to Reap Profits 3. Risk of Failure
- Opportunity to Contribute to Society 4. Complete Responsibility
- Opportunity to do What One Loves
Advantages vis-Ã -vis Disadvantages of Entrepreneurship Advantages:
Some of the significant advantages entrepreneurship offers to the entrepreneur are described below:
1. Opportunity to Enjoy Autonomy: Owning a business provides entrepreneur the independence and freedom to make decisions about his/her business. This is called autonomy i.e., "being your own boss". Surveys show that autonomy provides entrepreneurs opportunity to achieve what is important to them. Research has revealed "The feeling of being your own boss is very satisfying for many entrepreneurs." This is precisely the reason some people run their business even when business incurs losses.
2. Opportunity to Reach One's Full Potential: Many service people find their work is boring, unchallenging and unexciting. But not the entrepreneurs. In fact, entrepreneurs find their work challenging and exhilarating. For them, work is play. Business becomes their instrument for self-expression and self-actualization. They believe in 'internal locus of control' i.e., they believe that they are the maker of their destiny and the only boundaries on their success are those imposed by their own creativity, enthusiasm and vision. Owning a business also gives entrepreneur a sense of empowerment and a feeling of achievement.
3. Opportunity to reap Profile: Research findings report that earning profile has been the major motiving factor for most of the entrepreneurs to start their business. As such, many entrepreneurs became quite wealthy, if not super-rich. It is reported that self-employed people i.e., entrepreneurs are four -times more likely to be millionaire than people who work for others. Nearly 75 percent of those on Forbes list of the 400 richest are first-generation entrepreneurs.
4. Opportunity to Contribute to Society: Entrepreneurial history is replete with the entrepreneurs' significant contribution to the well being of society especially in the spheres of health and education. The relief contribution made by the entrepreneurs at the time of flood, drought, famine, earthquake, storm, and tsunami are well known and well-recognized by the society. Here is an example of the same as illustrative one.
On January 26, 2001, a massive earthquake measuring over 7 on the Richter Scale, affected the State of Gujarat, killing more than 30,000 people and devastating many towns and cities. Reliance Industries Limited immediately contributed Rs. 15 crore to the Prime Minister's Relief Fund. Reliance medical team handled over 450 cases, including 20-30 surgeries every day.
Such social contribution builds trust and respect for business and, in turn, the entrepreneur enjoys goodwill and recognition in the society.
5. Opportunity to Do What One Loves: Last but no means the least, entrepreneurship provides entrepreneurs the opportunity not only to make a living, but more importantly, to do what they love. In fact, entrepreneurship makes entrepreneurs' avocations (hobbies) their vocations (work) and entrepreneurs feel glad in doing it. These entrepreneurs are living Harvey McKay's advice:
"Find a job doing what you love, and you'll never have to work a day in your life." When entrepreneurs do what they love and enjoy, then the journey rather than the destination becomes their greatest reward."
Considering the above mentioned various advantages of entrepreneurship to entrepreneurs, some people held the view that "just as self-help is the best help, self- employment (i.e. entrepreneurship) is the best employment."
Disadvantages
If entrepreneurship were so easy and charming, the number of entrepreneurs would be much-much higher. But, that's really not the case because of the disadvantages entrepreneurship has. A few of these are described below:
1. Uncertainty of Income: Opening and running a business provides no guarantee that an entrepreneur will earn certain income to survive. Evidences available suggest that some entrepreneurs especially during the early days of their business barely earn enough to have adequate income for living. As such, the entrepreneur faces troubles in meeting the financial obligations of business. He/she may have to live on savings, if any. Thus, the certainty of getting a certain and steady income with working for someone else is absent in entrepreneurial career. The entrepreneur-owner is always the last to have the leftover, if any.
2. Personal Sacrifice: Especially the early years of business often demand that entrepreneurs keep nightmarish schedule. They often work extremely for long hours, might be six or seven days and 100-110 hours in a week. Obviously, this does not leave almost no time for personal recreation, relaxation, reflection, and for family life. In a way, the business consumes the entrepreneur's life. This often results in high level of stress for the entrepreneur and a strain on family relationship culminating to even separation from the life partner. Here is one such anecdote:
3. Risk of Failure: Just like high infant mortality rate in Indian population, there is also high mortality rate in small business in India. This is because small business is highly sensitive to withstand the outside onslaughts. It is sail that the Murphy's Law operates in small business without fail. If anything is to happen, it shall. According to recent research study, 35 percent of new business fail within two years. Within six years, the probability of failure plummets to 65 percent. Given such scenario, an entrepreneur before "reaching for the golden ring" should ask himself if he/she can cope psychologically with the consequences of his failure in business:
What worst could happen if my business fails?
How likely is the worst to happen?
What can I do to lower the risk of my business failure?
If my business were to fail, what is my contingency plan for coping?
4. Complete Responsibility: Where an entrepreneur is "his own boss", or "all in all" in his business, it's also true that he/she is " lonely at the top". Entrepreneur has to make all decisions of his/her business. But, being an expert in all areas is very difficult and also enormous burden for an entrepreneur. As such, entrepreneur remains, more often than not, "jack of all but master of none". Therefore, sometimes he/she finds not really knowledgeable enough to make decisions on some issues relating to business. A recent national small business poll conducted by the Confederation of Indian Industry (CII) found that 35 percent of small business entrepreneurs do not find persons to consult for help in making a critical decision. Entrepreneurs often describe this feeling of loneliness by saying: "I feel like I am on an island yelling for help and no one can hear me". Then, the decision made by the entrepreneur alone at times are likely to be wrong bearing devastating and impending effect on business. For this, the entrepreneur alone is held responsible.
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