What is an Entrepreneur? Definition, Types, Qualities, Characteristics, Entrepreneurship, Nature, Importance, Types, How to become, Role

What is an Entrepreneur?

The term entrepreneur is a French word, which refers to a person who organizes, manages, and takes on the risks associated with a business. An entrepreneur conceives a business, makes decisions to establish an undertaking/enterprise, and coordinates the numerous production variables to give it a head start.

As a result, it necessitates a willingness to accept risks as well as creativity in the first stages of economic activity. Entrepreneurs are company/enterprise owners who invest money and take risks related to business.

Entrepreneurs are important for the economy as they have the ability and initiative to foresee the demands for any product or service and bring brilliant new ideas to market. Entrepreneurs who succeed in taking on risks of starting a business are rewarded with revenues, fame, and chances for further expansion. Entrepreneurship failure leads to losses for people engaged as well as poor market spreads.

Entrepreneur Definition

“An entrepreneur is one who always searches for change, responds to it and exploits it as an opportunity. Innovation is the basic tool of entrepreneurs, the means by which they exploit change as an opportunity for different business of service.”

Peter Drucker

An entrepreneur is a person or the individual who starts a new venture or business, considering all the risks and enjoying most of the profits. The entrepreneur is often seen as an innovator, a source of new ideas, goods, services, and business/or procedures.

• An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards.
  
• An entrepreneur combines capital, land, and labour to manufacture goods or provide services through the formation of a firm.
  
• In a market full of uncertainty, it is the entrepreneur who can actually help clear up uncertainty, as he makes judgments or assumes the risk.

Read: What is Entrepreneurship?

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Concept of Entrepreneurship

Entrepreneurship is defined as the capacity and willingness to create, manage, and run a firm, including all of its risks, to make a profit. The most visible or tangible entrepreneurship form is the establishment of new firms. Entrepreneurship means investment in the factors of production for yielding profits.

The entrepreneur’s traits are experimenting, the ability to find and explore opportunities, risk-bearing, and the analytical ability of the mind. Entrepreneurs are an essential part of any country as they compete in an ever-changing and increasingly competitive global economy.

International Labour Organisation (ILO) defines entrepreneurs as those people who can see and evaluate business opportunities, together with the necessary resources to take advantage of them and to initiate appropriate action to ensure success.

The two major factors that verify entrepreneurship development are as follows:

• The ability of entrepreneurs to take risk
  
• The achievement potential of entrepreneurs

In addition to the above factors, some other factors that substantiate entrepreneurship development are as follows:

• Taking into consideration new factors of production, time, technology, and quality for success
  
  
• Working with the ability to speculate and gain a competitive edge above other businesses
  
  
• Taking advantage of new sources of capital
  
  
• Executing the functions of employer, merchant, and undertaker
  
  
• Supplying goods and services that are not yet known to consumers
  
  
• Finding a new market that is still unexploited
  
  
• Exploring and working with new opportunities for the exploitation of available resources
  
  
• Developing the economy of the nation
  
  
• Making decisions under uncertain situations

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Characteristics of Entrepreneur

Entrepreneurship is one of the four factors or resources classified by economists as essential to production: land/natural resources, labor, and capital. To create items or deliver services, an entrepreneur combines the first three of them. They usually develop a business strategy, hire employees, secure resources and finance, and lead and manage the company.

The following are some characteristics of successful entrepreneurs:

• Curiosity
• Structured Experimentation
• Adaptability
• Decisiveness
• Team Building

Curiosity

Successful entrepreneurs have a natural curiosity that permits them to seek out new possibilities regularly. Rather than settling for what they think they know, curious entrepreneurs raise tough questions and look into new possibilities. Without raising questions and challenging the existing status quo regularly, useful findings are easily forgotten.

Structured Experimentation

Curiosity necessitates the use of systematic experimentation. An entrepreneur must test each new possibility to see if it is worthwhile to pursue. For example, if an entrepreneur has a new concept for a product or service that may satisfy an unmet need, he/she must ensure that people are prepared to pay for it.

To accomplish so, the entrepreneur will need to perform extensive market research and undertake relevant experiments to confirm the concept and assess its viability.

Adaptability

The nature of business is always evolving. Entrepreneurship is a continuous process in which new difficulties and possibilities arise at regular intervals. It is practically hard to anticipate every eventuality.

In the case of happening of unexpected or uncertain events occurrence, the entrepreneurs must check on the situation and must try to adjust to the environment to make their firm go ahead.

Decisiveness

An entrepreneur must make difficult decisions and stick to them to be successful. As a leader, they are in charge of steering their company’s course, which includes everything from finance and strategy to resource allocation.

Having all the answers does not always imply being decisive. If you want to be an entrepreneur, you must have the courage to make difficult decisions and follow through. If the outcome is not what you expected, the decision to take remedial action is just as critical.

Team Building

A good entrepreneur knows his/her strengths and weaknesses. An entrepreneur must create well-rounded teams that match their strengths to overcome their weaknesses. In many situations, the entrepreneurial team, not a person, is the driving force behind a venture’s success.

The entrepreneur needs to surround himself or herself with talented teammates having complementary skill sets and also contribute to a common business objective.

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Nature of Entrepreneurship

A person who has started a business doesn’t need to surely become successful. For becoming successful, some similar traits are noticed among all the entrepreneurs.

Let us discuss some of these traits in detail.

• Ability to Bear Risk
• Innovation
• Visionary and Leadership Quality
• Open-minded
• Flexible
• Know Your Product

Ability to Bear Risk

Starting a new business involves some kind of risk. Entrepreneurs have the will to take the risk as they dare to decide uncertainty by evaluating risks.

Innovation

It takes a lot of creativity to come up with fresh ideas, establish a business, and profit from it. Change can be the introduction of a new product to the market or the development of a procedure that accomplishes the same goal more efficiently and cost-effectively.

Visionary and Leadership Quality

Entrepreneurs have a clear vision. Vision is a term that defines what a company desires to achieve in the long run. However, putting the plan into action will need a significant number of resources and personnel. Leadership quality is critical in this situation because leaders impart and guide their colleagues down the route to success.

Open-minded

Every scenario in business may be turned into an opportunity and exploited to a company’s advantage. For example, Paytm, PhonePe, Google Pay, BharatPe, etc., understood the importance and advantages of demonetization. They also realized that the demand for online transactions will increase rapidly.

Flexible

An entrepreneur must be adaptable and willing to alter based on the circumstances. To be successful, a businessperson must be able to embrace change in a product or service as and when it is required.

Know Your Product

A business owner should be familiar with the company’s product offers as well as market trends. It is critical to determine if the existing product or service satisfies market expectations, or whether it’s time to make some changes. Entrepreneurship necessitates the ability to be accountable and then adjust as required.

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Types of Entrepreneurship

Let us understand the types of entrepreneurship:

• Small Business Entrepreneurship
• Scalable Start-up Entrepreneurship
• Large Company Entrepreneurship
• Social Entrepreneurship

Small Business Entrepreneurship

A hairdresser, a grocery shop, a travel agency, a consultant, a carpenter, a plumber, and an electrician are examples of these enterprises. These individuals own or own their own company and employ family members or local workers.

For them, the earnings would be enough to feed their family rather than a $100 million business or an industry takeover. They raise money for their company by taking out small business loans or borrowing from friends and relatives.

Scalable Start-up Entrepreneurship

This aspiring entrepreneur sets out to build a company with the belief that their concept has the potential to alter the world. They attract investors who think outside the box and promote others who do so.

They hire the smartest and brightest individuals since the research focuses on a scalable company and experimental models. They will need additional venture cash to fund and support their initiative or company.

Large Company Entrepreneurship

These massive corporations have a well-defined life cycle. The majority of these businesses thrive and flourish by introducing new and creative goods that complement their core offerings. Changes in technology, client tastes, new competitors, and other factors put pressure on huge corporations to develop new products and sell them to a new group of customers in a new market.

To keep up with the high pace of technological development, incumbent businesses either purchase start-ups or try to build the product themselves.

Social Entrepreneurship

This sort of business focuses on creating products and services that address societal problems and needs. Their sole philosophy and objective are to labor for the good of society rather than for personal gain.

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Types of Entrepreneurs According to Motivation

According to motivation, there are the following types of entrepreneurs:

• Pure Entrepreneurs
• Induced Entrepreneur
• Motivated Entrepreneur
• Spontaneous Entrepreneur
• Growth Entrepreneur
• Super-growth Entrepreneurs

Pure Entrepreneurs

Pure entrepreneurs are individuals who are motivated by psychological and economic rewards.

Induced Entrepreneur

Induced entrepreneurs are individuals who get attracted to policy measures of the government and start up their entrepreneurial ventures.

Motivated Entrepreneur

New entrepreneurs come into existence because of the likelihood of making and marketing some new products for the use of consumers. As the product is developed to a saleable stage, the entrepreneurs are further motivated by rewards in terms of profit and enlarged customer networks.

Spontaneous Entrepreneur

Entrepreneurs who start their business out of their natural talent and instinct are called spontaneous entrepreneurs.

Growth Entrepreneur

Growth entrepreneurs are individuals who essentially take up a high-growth industry. Such entrepreneurs choose an industry with substantial growth prospects.

Super-growth Entrepreneurs

These are the individuals who make enormous efforts to take their venture to a higher level. Their growth performance is identified by the liquidity of funds, profitability, and success of their venture.

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Types of Entrepreneurs According to Stages of Development

According to the stages of development, the following are the types of entrepreneurs:

• First-generation Entrepreneur
• Modern Entrepreneur
• Classical Entrepreneur
• Innovating Entrepreneur
• Imitative Entrepreneurs
• Fabian Entrepreneurs
• Drone Entrepreneurs
• Forced Entrepreneurs

First-generation Entrepreneur

First-generation entrepreneurs are those who start an industrial unit using an innovative skill. They are essentially innovators who combine different technologies to produce a marketable product or service.

Modern Entrepreneur

They are the ones who undertake ventures that go well along with the changing demand in the market.

Classical Entrepreneur

Classical entrepreneurs are those individuals who are concerned with the customers and marketing needs through the establishment and growth of a self-supporting venture.

Innovating Entrepreneur

Innovating entrepreneurs are individuals who develop a new idea, technology, product, or service. Innovating entrepreneurs also make a makeover of some established product or service by making a change in the product’s value, utility, features, etc.

Imitative Entrepreneurs

Imitative entrepreneurs are those individuals who seek opportunities to take benefit of successful innovations carried out by innovating entrepreneurs. They work by copying other techniques and technological innovations.

Fabian Entrepreneurs

These entrepreneurs start their ventures based on conventions and customary practices. Such entrepreneurs do not want to bring change and they are not interested in coping with changes in the environment.

Drone Entrepreneurs

Drone entrepreneurs are reluctant to initiate any changes in their production methodology, and processes and follow their traditional methods and style of operations.

Forced Entrepreneurs

Forced entrepreneurs are individuals who unwillingly opt to be entrepreneurs because of circumstances. They generally do not have any plan, forward-looking, or business aptitude.

Read: Importance of Entrepreneurship

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Qualities of an Entrepreneur

• Confidence
• Ability to get things done
• Creativity
• Disciplined
• Open Minded
• Competitive
• Passion

Confidence

It plays a vital role in entrepreneurship, it is easy to become demoralized, frustrated and resentful it represents a lack of confidence. Self-Confidence is concerned with how a person feels about his ability. A successful entrepreneur believes in his abilities.

Ability to get things done

Successful entrepreneurs are persistent and hardworking. They master self-discipline to such extent that if a work is un-done they’ll strive to complete as soon as possible.

Creativity

It is the ability to use their insights and come up with new ideas of solving problems and getting things done. Often entrepreneurs with new ideas and innovations lead a successful career.

Disciplined

Entrepreneurs are focused on achieving their business goal, and eliminate any obstacles or distractions to their goals. Successful entrepreneurs are disciplined enough to take steps every day toward the achievement of their objectives.

Open Minded

Entrepreneurs are very likely to accept all the opportunities irrespective of their capacity. Ideas are constantly being generated by them to make the business more efficient and increase the workflow.

Competitive

Although the number of ventures in the market are increasing day by day, Entrepreneur needs to be competitive and tackle the situations to enjoy the fruit of success.

Passion

It is the most important quality of the entrepreneur, without love towards the profession one cannot do the job with the zeal and cannot give his 100%.

Read: Entrepreneurship Growth in India

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How to Become a Successful Entrepreneur?

It is critical to emphasize from on that there is no ‘magic bullet’ that will turn you into a wealthy and successful entrepreneur overnight. The formulaic combination of entrepreneurial abilities is:

Let us understand these entrepreneurial abilities in detail:

Don’t Take ‘No’ for an Answer

Regardless of how many setbacks and rejections great entrepreneurs face, they are always ready to dust themselves off and find a different path to the top. It takes this type of determination to turn a company concept from the realms of the imagination into a viable enterprise.

Learn From the Best

Finding a relevant and good mentor is needed to learn more about a particular industry and the numerous aspects of operating the own company.

Stay Eager and Ambitious

For successful entrepreneurs, running a successful firm is not an ego trip. They are eager and ambitious because they want to expand and provide a better product or service for their clients. When an entrepreneur quits trying to learn new things, complacency creeps in.

Never Stand Still, Evolve With the Times

Any successful entrepreneur learns and adapts new methods, procedures, or technology. A product created solely for your use would be considered a hobby, however, a product created for the market must be designed to meet changing market needs.

Nurture Long-term Business Relationships

There is no denying that business ties are important. Businesses almost usually prefer to collaborate with organizations that they know and trust. One of the most important variables in the long-term success of the company is the entrepreneur’s ability to cultivate long-term working connections with like-minded entrepreneurs in the field.

Inspire Those Around You

Every entrepreneur needs a team of individuals who can complement their abilities.

Trust Your Gut Instinct, Not Just Your Spread Sheet

Entrepreneurs must trust his/her instincts along with spreadsheets and statistics.

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Role of Entrepreneurs in Economic Development

Economic development generally refers to a process of upward movement in which a country’s actual per capita income rises through time. Entrepreneurship is critical to economic progress. Let us understand the role of entrepreneurs in economic development.

Capital Formation

Through the issuance of industrial securities, entrepreneurs mobilize the public’s idle money. Savings from the public sector are invested in industry, resulting in more efficient use of national resources. The rate of capital formation rises, which is necessary for rapid economic expansion. As a result, an entrepreneur is a wealth producer.

Improvement in Per Capita Income

Entrepreneurs seek and seize possibilities. They turn unused and underutilized resources like land, labor, and capital into national revenue and wealth in the form of commodities and services.

Generation of Employment

Entrepreneurs create jobs in two ways: directly and indirectly. Self-employment is the most direct path to an independent and noble life. Indirectly, entrepreneur employs millions of people.

Balanced Regional Development

Entrepreneurs in both the public and private sectors contribute to the reduction of regional economic inequalities. They establish industries in economically depressed areas to take advantage of numerous concessions and subsidies granted by the federal and state governments.

Contributes Towards Research and Development System

Contemporary business needs new ideas so entrepreneurs are often involved in innovations. Without numerous inventions, the world would have been a much tougher place to live in. The curiosity of entrepreneurs to do something unique often gives rise to new products. This ultimately improves technology and assists people in completing work easily.

Makes the Sources of Self-sufficiency

Entrepreneurs not only become self-sufficient themselves but also the source of employing others. Entrepreneurs provide an opportunity for individuals to work in their organizations.

As individuals get jobs, they get the opportunity of self-sufficiency that is derived in the form of monetary rewards, liberty, and the feeling of contentment from jobs.

Provides Immense Evident Prospects for Self-development

Individuals get maximum scope for growth and opportunity if they enter into entrepreneurship. Entrepreneurs get motivated by the knowledge and skills they derive from experience.