Importance of Entrepreneurship | Function, Types, Characteristics

Why is Entrepreneurship important?

Entrepreneurship can change the way we work and our lifestyle. If successful, their disruptive innovations may improve our standard of living, add to national income, create social change, community development and in addition to creating wealth with their entrepreneurial ventures, they also create the conditions for a prosperous society.

Entrepreneurship Definition

Entrepreneurship is the process of designing, launching and running a new business, which is often initially a small business along with any of its risk in order to make a profit. The people who create these businesses are called entrepreneurs.

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What is Entrepreneurship?

Entrepreneurship is a practice of starting a new business or reviving an existing one, in order to capitalize on new innovations and as well as for profits.

• Generally, entrepreneurship is considered as a difficult or resilient position as there are a quite good number of competitors who fail in taking off initially. Entrepreneurial activities differ from each other as the activities which are involved are dynamic and versatile.
  
  
• Entrepreneurship is associated with the uncertainty or high level of risk, especially when it is the initial stage or starting stage or introduction stage. A major advantage of being an entrepreneur is that he takes in all the opportunities irrespective of the resources he is obliged to or he has access to.
  
  
• Entrepreneurship involves being resourceful and finding opportunities, these include obtaining the resources to achieve the objectives of the business, capital can be one of the major resources. An entrepreneur needs to think out-of-the-box to improvise and to create demand for new goods which further increases the chance of sustainability and growth.

Read: What is an Entrepreneur?

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Types of Entrepreneurship

4 types of entrepreneurship are Small Scale Entrepreneurship, Scalable Startup Entrepreneurship, Large Company Entrepreneurship, Social Entrepreneurship and brief description is mentioned below.

Small Scale Entrepreneurship

As the name itself suggests that these type of enterprises are only suitable in areas where the capital and resources are limited and the scale of business are certainly small.
For example: Grocery stores, salons, tea stalls, etc.

Scalable Startup Entrepreneurship

These kind of entrepreneurship attracts enterprises or people who believe that they can change the market demands. Entrepreneurs in this model strive for growth and scalability. Their funding’s usually come from venture capitalists who are more interested in potential startups.

Large Company Entrepreneurship

These are consistent and large companies which sustain through innovation and offering diversified products to customers, often these type of entrepreneurship can be in form of partnerships or acquired firms.

Social Entrepreneurship

Social Entrepreneurship is where when an entrepreneur strives for a better society and creates products which are helpful for society to solve their problems. Their only goal is to make the world a better place and not to make profits or capitalize.

Read: Types of entrepreneur

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Importance of Entrepreneurship

Below are some key points about the “Importance of Entrepreneurship“

1. Employment
2. Entrepreneurs create change through Innovation
3. Entrepreneurs pay to society
4. Contribution in capital formation
5. Community development
6. Improve the standards of living
7. Promotes research and development

Employment

Entrepreneurs, in addition to employing themselves, they also create a number of job opportunities with their business venture. And as their businesses grow, more job opportunities are created, thereby reducing unemployment.

Entrepreneurs create change through Innovation

Every entrepreneur comes with a different idea to change the way of dealing with the market, everyone thinks in a unique way of solving a problem. Entrepreneur comes with a unique product which can help to resolve the societal problems with ease.

Entrepreneurs pay to society

It is a common notion that the rich are greedy, but it is mostly wrong. The more money they make, the more in taxes they pay which in turn funds social services.

Contribution in capital formation

According to Razar Naskast, “In developing countries entrepreneurship alone may have an important role in Breaking the unbreakable fort of capital and provide Momentum to economic forces in capital formation.

Community development

A community is better off if its employment base is diversified among many small entrepreneurial firms. Entrepreneurship leads to more stability and a higher quality of community life.

Improve the standards of living

Entrepreneur have implementing new ways, techniques and inventions to improve the standard.

Promotes research and development

Entrepreneurs put lots of funds for research and development with various research institutions and those R&D labs come with a different idea to change the way of dealing with the market.

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Characteristics of Entrepreneurship

Innovation

Basically means generating a new idea with which you can start a business and achieve a substantial amount of profits. Innovation can be in the form of a product, i.e., launching a product that no one is selling in the market.

Creating a new venture

Entrepreneurship is concerned with the creation of new ventures with new ideas. Such ventures start as a small business unit which fully satisfies the needs in the market. The new venture produces new and innovative products to customers.

Leadership

Most of the Entrepreneur has a vision, it takes a lot of resources in order to turn that vision into reality. A single person cannot do all the tasks like production, Supplying, accounting. In order to do these tasks an entrepreneur hires people, This also makes leadership very important as a leader provides the direction to the employees.

Profit Potential

Profit is the return or compensation to the entrepreneur for taking the risk and producing the goods and services to the society, Without the profit an entrepreneur’s efforts would remain only abstract and theoretical leisure activity.

Risk Assumption

Entrepreneurship involves a high level of risk which implies the possibility of loss. Probability can be estimated and the level of destruction or loss can be calculated. Usually, new ventures have a high risk of failure they need to be properly managed and guided.

Read: Qualities of an Entrepreneur

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Entrepreneurship Growth in India

In India, entrepreneurship can prove as a one-stop solution for addressing the major problems like unemployment and poverty. Considering these benefits, various initiatives have been taken by the government from time to time for entrepreneurship development in the country

Such as Industrial Policies and Five Year Plans specifically focusing on the growth of small scale sector, setting up of Special Economic Zones (SEZs), setting up of Entrepreneurship Institutions, organizing Entrepreneurship Development Programmes (EDPs) and various Government Programmes and Schemes for the promotion of entrepreneurship.

• Pradhan Mantri Kaushal Vikas Yojana (PMKVY): It is the flagship outcome-based skill training scheme of the MSDE that aims to offer 24 lakh Indian youth meaningful, industry relevant, skill-based training.
  
  
• Make in India: It is an initiative of the Government of India launched on 25th September 2014 to encourage multi-national, as well as domestic, companies to manufacture their products in India.
  
  
• ‘Start-Up India’: Initiative It aims to encourage entrepreneurship among the youth of India. The ‘Start-up India: Stand up India’ promotes bank financing for start-ups and offer incentives to enhance entrepreneurship and job creation.
  
  
• MUDRA Bank Micro Units Development Refinance Agency (MUDRA): Bank has been set up on 8th April 2015 for development of micro-units to encourage entrepreneurship in India and provide the funding to the non-corporate small business sector.
  
  
• Self Employment and Talent Utilization (SETU): It is a Techno-Financial, Incubation and Facilitation Programme to support all aspects of start-up businesses, and other self-employment activities, particularly in technology-driven areas.

Conclusion

The entrepreneur with his vision and ability to bear risk can transform the economic scene of the country. They play a vital role in initiating and sustaining the process of economic development of a nation.

The overall aim of an entrepreneurial development programme is to stimulate a person for adopting entrepreneurship as a career and to make him able to identify and exploit the opportunities successfully for new ventures.

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Can Entrepreneurship be taught?

People are having many doubt like “are entrepreneurs born or made” or else “Can Entrepreneurship be taught?”. So, regarding that stages of learning entrepreneurship for business is discussed briefly:

• Idea Stage: To be an entrepreneur, you need to come up with the idea for the business to be build up. No one can teach you How to think or innovate.
  
• Setting Business Plan Stage: RIght business plan will get you the funding and this can be taught in business school.
  
• Setting up the company Stage: This stage is a little tricky because choosing a team and employee can go through the certain fixed process but an entrepreneur needs to do the critical way of thinking and think out of the box process.
  
• Evolution stage: After the idea, funding, business plan is completed. Nows the time to put your idea into practice and start evolving them and here is where creativity comes in. Creativity skills cannot be taught in a classroom. 
  
  Some entrepreneurial skills can be taught and others cannot. “The key factor is motivation.”

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Entrepreneurship Quotes

“All our dreams can come true, if we have the courage to pursue them.”

Walt Disney

“Don’t worry about being successful but work toward being significant and the success will naturally follow.”

Oprah Winfrey

“Be the change you wish to see in the world.”

Mahatma Gandhi

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Common Question about Entrepreneurship

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References
Manish Kumar Jindal, & Awadesh Bhardwaj. (2016). Entrepreneurship development in India: A new paradigm. Proceedings of the World Congress on Engineering. WCE 2016, June 29 – July 1, 2016, London, U.K

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