Entrepreneurship

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Description: The term entrepreneurship embodies multiple meanings. One of the definitions of an entrepreneur is stated as a person with high aptitudes and the determination to bring change. The other definition simply states that an entrepreneur is someone who works for himself or herself.

Explanation: The term entrepreneur is derived from a French word, entreprendre. The meaning for this French word is “to undertake”. The business reference for this is to start a business. According to the Merriam-Webster dictionary, it defines the entrepreneur to be an individual who manages, organizes and assumes the risk of an enterprise or business.

Entrepreneurship by Schumpeter’s view: According to Joseph Schumpeter, an Austrian economist, the entrepreneurship explanation is based on innovation that includes:    

New products New production strategies New markets New types of organizations

Wealth is created when there is a new demand that is a result of such innovation. According to this statement, the function of an entrepreneur can be defined as a process where an individual makes use of different factors to come up with an innovative product for the consumers. This innovative product should be able to provide greater value to consumers as compared to the cost. This will result in greater revenue, thereby creating more wealth.

Comparison of entrepreneurship with small business: Mostly the term entrepreneur and small business owner are inter-exchangeable and are used synonymously. While both forms of businesses have quite mutual factors, yet there are many significant differences between small businesses and an entrepreneurial business. The points of difference between the two sorts of businesses are: 

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The amount of wealth creation: A successful entrepreneurial venture creates significant chunk of wealth which is far greater than ordinary income stream that is derived from the traditional employment system.

The speed of creating wealth: The speed of wealth creation also differs between the two sorts of business. While a small business can generate high profits amounting to several million dollars in its total life span; entrepreneurial venture can create the same profit figures in few years, for instance 5 years.

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Risk factor: The risk factor in an entrepreneurial venture is often high. The reason is that if the risk is not high than many other investors will imitate the business model and then the innovation opportunity won’t be there anymore.

Innovation: The biggest difference in the two forms of businesses is “innovation”. While a small business may involve in some ordinary business model or selling a common good or service; an entrepreneur works with innovation. The innovation factor serves as the competitive advantage for entrepreneurship, which results in greater wealth.

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