A True Definition of Entrepreneurship, Types and Importance

What is entrepreneurship?

The process of starting, developing and running a business, together with the financial risks, is called entrepreneurship.

In simple terms, it is the willingness to start a new business. It is very important for the economic development of the growing world market. A person who enters into entrepreneurship is called an entrepreneur.

Entrepreneurship

In general, starting your own business is a difficult proposal because 90% of startups fail every year. However, it is no surprise that more and more people are choosing to be independent in their professional careers.

According to statistics from dealsunny.com, 2 out of 3 people worldwide think that entrepreneurship is a good choice.  The majority of people think that entrepreneurship only has one meaning. But there are different types of entrepreneurship, as described below:

Types of entrepreneurship

Small entrepreneurship

In today's world, most companies are still small businesses. In the US, 99.7% of all companies are small companies and have 50% of all non-governmental employees.

They are usually hardly profitable, but they only make a profit to earn a living and support their families. Such companies lack the scale to attract venture capital and are funded through friends / family or small business loans.

Examples of entrepreneurship in small businesses are hairdressers, supermarkets, electricians, carpenters, plumbers, consultants, etc.

Scalable Startup Entrepreneurship

In this type of entrepreneurship, entrepreneurs start believing their company that their vision can change the world. Their financing comes from venture capitalists and they hire the best employees. Their goal is to find a scalable and repeatable business model. Once they have found it, further financing from venture capitalists is needed to grow their business.

Scalable startups make up only a small part of all companies because of the risk capital and too large a return.  Examples of scalable start-up entrepreneurship are Facebook, Instagram, online shopping for electronics, etc.

Great entrepreneurship

Large companies through sustainable innovation and offer new products that are variants of their core products. New products are being developed to meet changing customer needs and advanced technology. Companies often do this by collaborating with or buying innovative companies.

Examples of great entrepreneurship are Google, Microsoft, Samsung, etc.

Social entrepreneurship

Social entrepreneurship is where an entrepreneur creates products and services to solve social needs and problems. Their sole purpose is to improve the world and not to make a profit or gain wealth. They can be non-profit, profit or hybrid.

An example of social entrepreneurship is an organization called Safepoint Trust from Marc Koska, which is working on redesigning medical devices and introducing inexpensive non-reusable syringes for clinics with insufficient funding around the world. This organization was able to deliver 4 billion safe injections in 40 countries with their groundbreaking Auto-Disable syringes.

The importance of entrepreneurship

Have we not all wondered at least once in our lives why entrepreneurship is so attractive to the majority? Why is it so important?
  • Entrepreneurs create jobs: entrepreneurs not only create a job themselves, but also create a number of vacancies at their company. And as their businesses grow, more jobs are created, reducing unemployment.
  • Entrepreneurs create change: when an entrepreneur makes a product hoping to solve a problem or when they explore a new idea, it brings a change to the world. Their ambitions and ideas improve the world.
  • Entrepreneurs indicate to society: it is a general idea that the rich are greedy, but it is usually wrong. The more money they earn, the more taxes they pay, which in turn finance social services. Some entrepreneurs, as we know them, such as Bill Gates, the founder of Microsoft, are the largest donors for charities and non-profit organizations.

Factors that influence entrepreneurship

No matter how attractive the idea of ​​entrepreneurship may seem, there are a few factors that you should consider before you choose when and where you start your business. Some of the factors that influence entrepreneurship are:
  • Political factors: the market in one place can be capitalist, communist or a combination of both. Capitalism requires innovation, while communism requires that entrepreneurs and the political class are well connected. Ideally, a country should be capitalist for entrepreneurship to flourish in the region.
  • Legal factors: the strength and fairness of the legal system in a country plays a major role in the quality of entrepreneurship. This is because, in many cases, entrepreneurs may require the courts to enforce contracts agreed between two parties. But in many countries, such contracts are not enforced correctly and this risk prevents the development of entrepreneurship in those countries.
  • Taxation: Governments sometimes resort to excessive taxation because they take the policy of taking away the rich and giving them to the poor. However, the basic principle of entrepreneurship believes in the continued existence of the strongest and the excessive tax rule contradicts this. That is why entrepreneurs want to set up businesses in places where the government is very little affected by taxes.
  • Availability of capital: capital is the prerequisite for starting high-risk businesses and they may also need capital immediately to scale up the business as soon as an idea becomes successful. Therefore, entrepreneurship helps the economies to grow in those countries where there is a well-developed system for offering capital at every stage, i.e. start-up capital, venture capital, private equity and equity and bond markets.
  • Work and resources: availability of skilled labor and required resources at reasonable prices are an important factor for starting a business in a region. Countries such as India, Bangladesh and China have witnessed a huge increase in entrepreneurial activities due to the favorable labor markets for them.
Make sure you plan to start your business with all these factors in mind to increase the chances of your success. Every independent person with leadership qualities would opt for entrepreneurship in today's world, although there are many risks and responsibilities involved.

"Entrepreneurship is about being able to face failure, managing failure and succeeding after failure" - Kiran Mazumdar Shaw

If you think you have the skills and talent to be an entrepreneur, read our article "How to become an entrepreneur" to guide you in your journey to success.

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