What is Entrepreneurship?

You probably heard enough of the word to ask yourself – just what is entrepreneurship? What is this elusive concept that seems to tickle the fancies of every economist and Average Joe looking to make his fortune? In a nutshell, it’s the creation of new companies that capitalize on a certain opportunity. Say, for example, you’ve noticed a high demand for chili cheeseburgers, but no one in your area sells them. Entrepreneurship, in this regard, will entail putting up your own chili cheeseburger business to address that demand.

Entrepreneurship is Not Simple

Of course, entrepreneurship isn’t as easy as just putting up a business. It’s a very difficult endeavor, and a majority of newly-formed enterprises fail. A lot of the difficulty comes from that fact that every single entrepreneurship project is wildly different from others. A food service booth is miles away from a vintage clothing chain – different businesses require different strategies. No matter how many analyses you make, a calculated risk is still a risk – and entrepreneurship is definitely a risk. Think about it: you’re investing a generous amount of capital into something that hasn’t even proven its worth yet. You’re starting a business without being completely sure that it’ll make money. However, the rewards that successful entrepreneurs enjoy are well worth the insecurity.

What Influences an Entrepreneur?

What factors influence the success of entrepreneurial endeavors? First of all, there’s available capital. A lot of entrepreneurs don’t have the funds necessary to start their ventures. What happens then is one of two things: either the budding entrepreneur puts his project on hiatus until he can save up the money to start it; or he looks for a business angel. Business angels are often established professionals looking to fund an entrepreneur in exchange for an agreed-upon cut of the profits. For example, a business angel might lend you $100,000 to start off your brand-new t-shirt company, but under the condition that he gets 2% of your profits for the company’s first five years.

Another factor that plays into the success of entrepreneurship is the culture that the company is born into. Consumers in certain communities may not be open to new business ventures, depriving your business of the customers it needs to stay afloat. You probably won’t do well opening a fast-food chain in a town where McDonald’s reigns supreme.

Necessary for Economic Growth

Despite the risks and numerous variables that entrepreneurship deals with, most economists agree that economic growth owes much to entrepreneurs. It’s been determined that small businesses are an essential cog in the world’s economic machinery. Entrepreneurial ventures provide a lot of benefits to any economy – the creation of job opportunities, the growth of income, and the reduction of poverty are among the most significant benefits successful entrepreneurs bring to the table. They also promote the enhancement of goods and services as entrepreneurs compete with each other to maximize their profits. Because of this, the government has many means to support entrepreneurship, as promoting the creation of these new businesses is crucial to economic progress.