Are you an entrepreneur? Do you want to become a better entrepreneur? Are you interested in knowing the basics in entrepreneurship?
If your answers are yes, then we are here to share with you the basics in entrepreneurship.
Knowing the basics in entrepreneurship will help you to be a better entrepreneur and do things properly.
Let’s begin by explaining what entrepreneurship is…
Meaning Of Entrepreneurship – Basics in Entrepreneurship
Entrepreneurship is the activity or task of establishing businesses or a business and taking on financial risks with the view of gaining profit.
An entrepreneur is a person who takes on this task or activity.
Such a person is the one who will be responsible for all the initiatives, innovations, and risks involved in the business.
Therefore, the entrepreneur assumes every result gotten from the risk taken by them.
That is, if there is a loss or profit gained from risk, the entrepreneur is the one who bears the brunt of this result.
Entrepreneurship is not an easy journey to embark on.
There will be several challenges, difficulties, and setbacks.
Hence, every entrepreneur needs to know the basics in entrepreneurship to help them stand firm and succeed.
Features of Entrepreneurship – Basics in Entrepreneurship
Features of entrepreneurship are essentially the basics in entrepreneurship.
This is because it sheds light on what makes up entrepreneurship.
Below are the features that characterize entrepreneurship:
“Economic activities” is one of the characteristics of entrepreneurship.
These activities refer to things that pertain to providing, making, buying, and selling services or goods.
Entrepreneurship involves those activities.
It creates and operates enterprises with the view of generating profit from economic activities.
Profit Potential – Basics in Entrepreneurship
This is the likelihood of an entrepreneur getting compensation or returns for bearing the risk of growing an idea or vision into a business venture.
So, the lack of profit potential makes entrepreneurs’ efforts remain abstract and just a leisure activity.
An essential feature of entrepreneurship is risk-bearing.
Entrepreneurship calls for individuals to be willing to bear the risk of creating and executing new ideas and innovations.
However, new ideas or innovations are sometimes speculative, and also their results might not be positive and instant.
Innovation – Basics in Entrepreneurship
Innovation is another characteristic of entrepreneurship.
This is because entrepreneurs continuously seek new ideas.
Entrepreneurship compels individuals to search and evaluate model business operations to ensure that a better approach is found and adopted.
Furthermore, it enables and pushes people to perform better in different business fields.
Entrepreneurial Process – Basics in Entrepreneurship
Entrepreneurship is a journey that has to go through certain stages.
Hence, every entrepreneur has to go through an entrepreneurial process to ensure that they succeed.
There are five stages in an entrepreneurial process.
These stages are fundamental and have to be done one at a time.
Yes, there are different approaches to establishing a business venture.
However, following these stages will ensure that everything you need to do in starting a business is done correctly.
1. Generation of Ideas
Every enterprise starts with an idea.
This idea comes to an entrepreneur’s mind when they see that there is a gap in a specific business sector.
As a result of seeing this gap, they start thinking of what to do to bridge the gap.
Eventually, such an entrepreneur starts asking questions and seeking answers to identify the opportunities that will help them meet the market’s demands.
When they keep at this, they will develop an idea that will improve things and enable them to benefit from it.
In this stage of the entrepreneurial process, you should know that idea generation is something that anyone can come up with.
This is because the stage of generating an idea is much easier than other stages.
A person who desires to be an entrepreneur will move beyond this stage to the next.
But, some other people will discard the idea they got.
2. Determination Stage – Basics in Entrepreneurship
The determination or decision-making stage is a very crucial point in an entrepreneurial process.
This is because it is at this stage that a person decides to start their project.
At this stage, entrepreneurs have to stay active and motivated to ensure that they land their idea.
It is at this stage that they start doing research and seeking where to get the needed resources.
An entrepreneur needs to do this to move forward.
3. Business Planning
The next stage is where entrepreneurs have to draft out their business plans.
Business plans are written guidelines that enable one to outline their goals and how to achieve them.
Entrepreneurs need to draft their business plans to stay on track at all points in their entrepreneurial journey.
4. Project Creation – Basics in Entrepreneurship
The next thing for entrepreneurs to do after drafting their business plans is to create their projects.
To do this, they will need to get the needed resources.
In the business plan, entrepreneurs will state how to raise funds for the business.
This will make it easier for them to get funds.
It is in this stage entrepreneurs start investing their resources in the project and start operations.
When they have done this, they will feel relieved because they will witness the first stage of their company.
5. Maintenance And Management
After operating for a few months, entrepreneurs will notice an increase, maintain or decrease in their business sales.
This is the stage where entrepreneurs work to maintain the business revenue growth.
Entrepreneurs need to be more concerned about this than getting a better office.
To maintain and increase their business revenue growth, they have to learn to manage their resources.
It might not be easy at first, but with time they will get better at management.
Management is said to be the last stage of the entrepreneurial process.
However, it is safe to say that an entrepreneurial process doesn’t end because the journey of being an entrepreneur does not end.
This is true, even when you have become a successful business person.
Types of Entrepreneurship – Basics in Entrepreneurship
The types of entrepreneurship are important basics in entrepreneurship every entrepreneur should know.
Types of entrepreneurship are classified based on how entrepreneurs conduct and set up their businesses.
When you know the types of entrepreneurship, you will be capable of identifying the kind you are doing.
This will enable you to perform better.
Below are the types of entrepreneurship:
These are businesses set up by entrepreneurs who intend to grow into a business chain, conglomerate, or franchise.
The entrepreneurs of these businesses often run the business by themselves and employ family members, friends, freelancers, or locals.
For these entrepreneurs, their profit is usually aimed at providing for their families and not growing more business.
Hence, once that need is met, they are satisfied.
They fund and set up their businesses with their money or get loans for small businesses or from family or friends.
This type of entrepreneurship is very common.
Examples of businesses based on this entrepreneurship are grocery stores, consultants, hairdressing salons, and carpentry.
Scalable Startup – Basics in Entrepreneurship
These are businesses that started from just a vision that is aimed to bring change to the world.
Entrepreneurs that embark on this type of entrepreneurship start their businesses on a small scale.
They then nurture and scale their businesses.
These entrepreneurs do this by attracting investors and thinking outside the box.
They also do researches on scalable businesses and work with bright minds to make their business a success.
Most of these businesses begin in a garage, home office, or attic before branching out and growing to have large business headquarters.
They are less common compared to small businesses.
This type of entrepreneurship is one whereby there is a continuous generation of ideas and visions.
These vast companies grow their business by producing innovative or new products or services.
They ensure that their innovations are related to their core products or services.
As a result of technology changes, new competition, and so on, these businesses are mostly under pressure to produce new goods or services for the market.
To ensure that they meet the market demand, these companies attempt to develop innovations.
In cases where they cannot generate innovations, they opt to purchase innovation enterprises.
Social Entrepreneurship – Basics in Entrepreneurship
This entrepreneurship aims to bridge gaps and bring solutions to social problems.
Entrepreneurs who embark on this type of entrepreneurship are more concerned with bringing good social changes through their innovations.
Hence, they take on risks with little interest in making profits.
Examples of social entrepreneurship are projects aimed at environmental conservation, philanthropic activity, or racial justice.
Types of Entrepreneur – Basics in Entrepreneurship
Yes, there are also types of entrepreneurs.
It is another important basic in entrepreneurship.
Types of entrepreneurs are different from types of entrepreneurship.
Entrepreneurs are classified into types based on their level of enthusiasm to come up with innovative ideas.
Hence, we have…
Entrepreneurs who are innovators are the ones who are capable of coming up with newer, more economical, and better ideas.
These entrepreneurs are people who contribute to the economic growth of a society or country.
They are great leaders in business and frontiers for new inventions and development.
An example of an innovator is Anil Ambani, the CEO of Reliance Anil Dhirubhai Ambani Group.
Imitators – Basics in Entrepreneurship
These are entrepreneurs, who copy the ideas and innovations of innovators.
They imitate the work of innovators because they operate in an environment that does not allow them to be creative or innovative.
Imitators are seen in situations or countries that have weak institutional and industrial bases.
Hence, it creates difficulties for the entrepreneurs in such situations or countries to initiate their innovative ideas.
Several entrepreneurs operate in numerous business fields and get their achievements from imitating innovative entrepreneurs’ ideas.
Small companies that manufacture cars are examples of imitators.
These entrepreneurs are people who strive to bring about innovations and transformations that will help society.
They work to improve health, human right, the environment, education, and other aspects that improve people’s living standards.
Social entrepreneurs are very zealous and aim all their innovations towards alleviating poverty and suffering in society.
An example of a social entrepreneur is Doctor Mohammed Yunus, the founder of Gramin Bank.
Fabian Entrepreneurs – Basics in Entrepreneurship
Fabian is a term that means to seek victory by delaying rather than in a decisive battle.
People who go through this method in getting victory are referred to as Fabians.
Hence, a Fabian entrepreneur is an entrepreneur who is not moved to initiate innovation and ideas until there is an impending threat to them.
These entrepreneurs will choose not to do anything if there is a gap in their business sector.
However, when their business starts being affected, they will come up with good innovations that will ensure their business flourishes.
“Drone” is a term used to describe people who live on other people’s labor.
Hence, a drone entrepreneur is an individual who is content with existing business speed and mode.
They are not concerned with attaining market dominance.
These entrepreneurs are happy with the status quo.
They are resistant to innovation and changes.
Entrepreneurs’ Functions – Basics in Entrepreneurship
Entrepreneurs’ functions are the purpose of being an entrepreneur.
When an entrepreneur cannot perform some of the basic functions, they will fall short in certain areas and not perform at their best.
Hence, every entrepreneur needs to be capable of performing the following functions:
Although several entrepreneurs fall back in performing this function, it happens to be one of the most essential functions.
Entrepreneurs are meant to be capable of developing new products or services, technologies, and markets.
Innovation involves doing things differently from the existing methods.
Entrepreneurs make use of creative skills to come up with innovations and benefit from the opportunities that the market presents.
They are in a constant search to make positive change at all times.
Finally, note that a business can fail when innovation is lacking.
Research – Basics in Entrepreneurship
Entrepreneurs research before venturing into a business.
They might be dreamers, but they are practical.
Hence, they ensure that they gather the information that will help them to determine the chances of their business success.
To implement their ideas, they have to research the best method of approach.
Entrepreneurs are risk-takers.
They are the ones who assume the consequences that come from the risks taken in implementing innovations or new ideas.
The fact that they are willing to take and assume risks make it easy to take the initiative in seeking innovations and working to implement them.
Organizing Resources – Basics in Entrepreneurship
Entrepreneurs perform the function of organizing resources necessary to implement their innovation or ideas.
Before they do that, they have to identify those necessary resources.
These resources can either be non-human and human resources.
Entrepreneurs’ ability to organize well will help them to promote their new ventures and increase productivity.
It will also help them to supervise and distribute responsibility and work among their workers.
Identifying Prospects and Opportunities
Every entrepreneur has to be capable of identifying opportunities that will bring about positive results
Entrepreneurs are capable of seeing opportunities when others see nothing.
This makes them stand out among other people.
Decision-making – Basics in Entrepreneurship
We earlier discussed the stages in an entrepreneurial process.
One of those stages is decision-making.
With decision-making, an entrepreneur decides if they want to venture into business or implement their innovation or ideas.
Hence, decision-making falls under the entrepreneurs’ functions.
Factors That Affects Entrepreneurship – Basics in Entrepreneurship
Certain factors influence and affect entrepreneurship.
As a result of these factors, there are different variances in entrepreneurship.
Regardless of the classification entrepreneurs finds themselves under, the variances ensure that they do not operate the same way.
So, even if when there are two innovative entrepreneurs, their method of operation will be different.
Let’s see the factors that affect entrepreneurship …
These factors are the core abilities of entrepreneurs.
- Proactive: the ability to identify and utilize opportunities
- Initiative: the ability to do things without being asked to
- Perseverance: the ability to work regardless of any challenges or obstacles with success in mind
- Persuasion: the ability to convince people to patronize their business and build good relationships
- Self-confidence: the ability to believe in one’s self and stick to decisions
- Problem-Solving: the ability to come up with new ideas and innovative solutions
- Self-critical: the ability to learn from one’s mistakes and other’s experience
- Planning: the ability to gather information, prepare plans, and monitor performance
- Risk-taking: the ability to take and bear risks
Not all entrepreneurs possess all these abilities.
The set of abilities that one entrepreneur possesses can be different from the ones another entrepreneur owns.
Hence, there will be differences in the way they operate.
However, an entrepreneur needs to possess all the aforementioned abilities to make them better entrepreneurs.
Environmental Factors – Basics in Entrepreneurship
These are factors that are related to the work conditions of entrepreneurs.
Examples of environmental factors include the legal system, political climate, social and economic conditions, market situations, etc.
All these conditions significantly contribute to entrepreneurship growth.
For instance, when an entrepreneur works in a country where there is political stability, it will help to facilitate good economic activity.
The combination of environmental and personal factors works to influence entrepreneurship.
Conclusion on Basics in Entrepreneurship
The basics in entrepreneurship include the features of entrepreneurship, its types, and the entrepreneurial process.
It also includes the types of entrepreneurs, entrepreneurs’ functions, and factors of entrepreneurs.
You will become a better entrepreneur once you fully understand these concepts.
Additionally, your entrepreneurial journey will become easier when you apply some of the helpful information we shared with you.