The Hustler's Digest StaffDo you want to know the factors that distinguish an entrepreneur from others? Read this article to get the complete details of the term entrepreneur and know what are the functions of an entrepreneur that helps him/her build up a successful business.
An individual who takes the first step toward a business plan is called an entrepreneur. He is called an entrepreneur and not a businessman because his idea differs from the already existing business plans. He has his distinct idea to launch a product or service in the market which also gains him consumers.
There are many entrepreneurs in society and they are considered important because they influence the economy and make products in society. They bring human civilization into society and are called game changers because they bring innovative products and services into society. They work on a vision and all their plans and efforts revolve around that vision. Moreover, they work on it despite all the risks involved.
Successful entrepreneurs are an inspiration for people and they leave behind them a legacy. Entrepreneurs possess several functions that help them achieve their goals. Anyone with leadership qualities and following those functionalities can become an entrepreneur.
If you are interested in unique ideas and skills that help those ideas bring into reality. This article is your guide toward all the factors of entrepreneurship. It will help you understand the term entrepreneurship, how it differs from the businessman, and what are the functions of an entrepreneur that helps him succeed.
Who is an entrepreneur?
An entrepreneur initiates a new enterprise by presenting a business model and taking necessary physical and mental actions. They embrace the risks of both failure and success. Often starting without professional expertise, entrepreneurs experiment with their ideas in the market.
Their business models revolve around innovative concepts aimed at launching a venture and generating profit. Entrepreneurs operate independently, not tied to any specific company, and can emerge from anywhere. Their innovative ideas may manifest as services or products that cater to the masses, driving consumer purchases and profit. The core of entrepreneurship lies in creating new market directions that benefit consumers and yield substantial profit.
Entrepreneurs lead and manage their business ideas, serving as inspirations for future generations and paving the way for others to follow. The level of development and progress varies among entrepreneurs, influenced by various factors. Successful entrepreneurs ultimately establish businesses. Running a successful business requires a mindset known as entrepreneurship.
When financially capable, entrepreneurs invest their own money to fund their new ventures. Otherwise, they seek investors attracted to groundbreaking ideas that promise significant profits. Innovative business concepts act as magnets for investors, as they hold the potential to revolutionize the market.
Dedication and passion drive entrepreneurs toward their goals. This passion fuels their journey, helping them overcome obstacles. Entrepreneurship demands a unique blend of passion and attitude, guiding entrepreneurs toward their ultimate objectives.
Difference between an entrepreneur and a businessman
Business and entrepreneurship are often confused to be similar terms but there is a difference between the two. Business is another start-up of an already existing idea. It is based on existing concepts and has an ongoing marketplace. They are more bothered about the demand in the market and high profits.
Business ideas already exist in great demand and someone starting a new business only comes up with another option in the market. As the consumers are already available in the market, businessmen expect high profits. Although businessmen have many competitors existing in the market they can still make their business successful with few marketing strategies. The nature of business is analytic and calculated.
Entrepreneurs are the people who took the first step in a business plan and businessmen walk on their chalked-out path. An entrepreneur is someone who thinks out of the box and comes up with an innovative idea. He thinks about the possibilities that the idea can bring into society. He creates a new marketplace for future businessmen. The methodologies adopted by entrepreneurs are unconventional. They are more inclined towards the uniqueness of the idea.
The risk factor in entrepreneurship is higher than in business because the idea is entirely new and its demand is not known. Entrepreneurship involves creativity while business is more focused on the market playing. The only creativity that a businessman infuses is in the marketing strategies only while an entrepreneurship is based on a creative concept. It starts from a creative plan and the whole process of entrepreneurship revolves around it.
Types of entrepreneurs
Depending on the scale of an idea and the nature of the business a person is intending to establish, four types of entrepreneurship exist:
Small business entrepreneurship
These are mostly associated with the day-to-day activities of the people. They fill up the necessities of society as the entrepreneurs included in this type of entrepreneurship provide the basic goods or services to the society. The person who starts it does not plan to expand it and it mostly comes into existence on a small scale. It also involves a single person’s investment and the number of resources and employees hired is also small.
The number of small-scale entrepreneurs is a lot more than any type of entrepreneurship because it does not need a major resource. The major goal behind this type of entrepreneurship is to start a business that can be a source of income. The tuckshops, dry cleaners, bakeries, etc are all included in this type of entrepreneurship. They are self-employed entrepreneurs who work themselves or hire a small number of people to help them in the venture.
Scalable startup entrepreneurship
Entrepreneurs come up with the idea of starting a venture that expands and makes high profits. They are innovators because they sketch their business idea in a way that makes them stand out. They expect their venture to make rapid progress and for that reason, they think out of the box. It tends to start from scratch and then make rapid progress like Amazon, Netflix, and Apple owners did. These companies started in garages and then slowly flourished into massive business firms. Their vision is vast and for that reason they stick to it despite no rapid growth in the start. These entrepreneurs have a long-term plan to sustain the business and make a profit from it. It is most of the time an experiment that has a goal set and the entrepreneur’s investments and resources are all revolving around that goal.
Large company entrepreneurship
It is not an entirely new idea starting from scratch but is most of the time a part of an already existing business. It includes companies that already have their name made in the market and come up with more innovative business plans for the affiliate. A new product is made with a different group of resources and technologies so that they sell the product. It attracts a new set of customers and slowly makes a separate venture but is affiliated with the main venture as well. The goal of this type of entrepreneurship is to not be restricted to one business and to expand its market by owning several companies.
Social entrepreneurship
These entrepreneurs are least concerned about the profit their business makes and more concerned about social welfare. It only includes the plan that will help society and resolve any social problem. It can be a service or product but the main goal is to facilitate the people. Also, it includes the organizations or companies that work without any profit and their main goal is to make any environmental or social change. The most famous social entrepreneur is Bill Drayton who founded an organization in 1980. This organization works to provide financial and professional support services to less privileged people around the globe.
What are the functions of an entrepreneur?
An idea can be turned into reality if it is nurtured and executed properly. Entrepreneurs turn innovative ideas into reality through some functionalities. These functionalities are those characteristics of an individual that separate him from the masses. Entrepreneurs despite their level of development in society have several functions. To end up with successful entrepreneurship some key factors should be kept in mind. These functionalities are:
Decision making
The entire process from organizing it and putting the exact idea into practicality is dependent on the decisions the entrepreneur makes. The decision-making strategy of an entrepreneur has to be strong enough to help him sell his product or create awareness about the product in the world. All the decisions of an entrepreneur from determining what to produce, what equipment to be used in the process, in what quantity, and how to produce shape the result.
An entrepreneur should be capable enough to take control and manage things himself. He should know what decision to be made at what time that helps him achieve his end goal. From small-scale decisions including the price and quality of the equipment to be used to large-scale decisions including the proportion of employment and the organization of resources should all be finalized by the entrepreneur.
Innovative thinking
Entrepreneurship is about coming forth with new ideas, changing the dynamics, or providing substitutes to the already existing ideas or products. This requires an entrepreneur to think about new sources, technology, and management ideas and bring these ideas into action. Their innovative thinking makes their business plan unique and captivating. This will also make their place in the market strong and attract consumers to sell their product or service.
If the idea is not unique it should be distinct from the already existing counterparts in a way that the services or products it offers have a different ideology. This will increase the value of a business plan in the market as the already existing ideas and methods have been modified by the entrepreneur. Consider if an entrepreneur comes up with a bakery plan, it will attract lesser consumers. However, if the entrepreneur brings innovation to the bakery business plan by adding new techniques or ideas, it will attract more consumers.
One of the successful entrepreneurs Herbert David Kelleher who is the co-founder of SouthWest Airline brought innovation to his airline business by allowing the workers to have fun in their line of duty. He gave liberty to the workers to bring innovation into his business. This has provided the staff the confidence to handle any situation in unique and innovative ways. The employees even attained learning at SouthWest Airline University about social skills to implement into their work when they deal with customers. This helped strengthen their workers’ performance which eventually benefits the company.
Acknowledge the target customers’ needs
The strategy of an entrepreneur should be determined by the customers. he/she wants to attract. The entrepreneur should be well aware of the customers’ preferences, their requirements in terms of pricing and quality of the product or service. This will help an entrepreneur to think about a beneficial innovation to be added to the business plan. Consumers are primarily interested in their needs being satisfied so one should always think from the perspective of the consumer to gain long-term customers.
Good customer service goes a long way in the business. Successful business ventures consider customers their priority. The core element that an entrepreneur is committed to should be customer service which will motivate an entrepreneur to end up with a quality product or service. It should not be catered only in the initial stages when an entrepreneur is planning out a business idea but should also be carried out until the business is in a run. The business experiences linear growth when the entrepreneur is actively keeping a record of the customer needs. It also includes public relations skills through which consumers are convinced to buy the products or services. Only a large public convinced to purchase your product can make a business successful.
Risk-taking
There are various types of risks involved when someone comes up with a new idea as the results are never certain. There are two types of risks: financial and career. The financial risk affects the investor which can be an entrepreneur himself or someone else. A new venture requires the maximum time and effort of an entrepreneur so most entrepreneurs give up their jobs and dedicate themselves to their business plan. This is a risk to their career because the failure of a new idea will affect their overall career.
Most successful organizations or companies came into existence because of the risk-taking capability of their owners. Every innovation has this factor of risk because unless it is there in the market one can never give surety about the outcome. One can predict the outcome but can not entirely be sure about it so to put a new idea into practicality, the risk is involved when an entrepreneur must be capable enough to take it.
Organizing and managing the resources
Firstly, an entrepreneur must know all the resources be it human or non-human that can help him/her convert the idea into reality. Entrepreneurs find the most suitable opportunity for their plan to be carried out. This requires an entrepreneur to do a feasibility study so that he/she becomes aware of the budget and then looks for the investors, required capital investment, and size of the business.
An entrepreneur must have all the required things mapped out before starting any enterprise. It takes. This requires proper arrangement and organization of resources. An entrepreneur should be capable enough to organize and divide the resources, sources, and total budget required to start a venture. If an entrepreneur does not have an idea about which investor to be approached or what technology to be chosen, he/she will not be able to manage the activities. He/she takes risks and seeks new actions in the field of production technology. The organization does not only include the combining of resources and workers but it also includes a schedule so that everything is executed on time.
Nowadays, small-scale businesses usually have entrepreneurs as managers but bigger business enterprises hire paid managers. Management skills help an entrepreneur keep track of expenses which can influence the decisions in the future to make more sales. Even if managers are hired, entrepreneurs themselves should take the lead first so that the newly hired ones can follow in the same footsteps. An entrepreneur should make sure that the management and workers are on the same page regarding the desired goal.
Technology advancement adaptation
Entrepreneurs work on new ideas which will meet the demands of the customers. All entrepreneurs want their venture to run for a longer period to get a long-term reputation. This requires them to adapt their strategies according to new technologies and diverse environments. Technology provides a medium through which most of the activities take place so it is equally important in entrepreneurship. An entrepreneur can only make efficient use of technology when he/she is well aware of the technologies.
Technology also works as a resource for an entrepreneur which can help him/her carry out large-scale activities. Identifying this kind of technology and making it a part of the venture can benefit the business. All modern-day successful entrepreneurs include the use of technology in their business plans. It gives them new momentum in society and flourishes the business.
Conclusion
Entrepreneurs drive society forward with innovative ideas and plans. They succeed by constantly struggling and implementing proper strategies. Unlike those who rely on existing ideas, entrepreneurs make unique contributions to the market, setting them apart from businessmen in saturated markets. Entrepreneurs, known for their independent initiation, fall into four main categories: small business entrepreneurs, scalable startup entrepreneurs, social entrepreneurs, and large company entrepreneurs. They channel human efforts productively, create jobs, and fulfill public needs, boosting the state’s economy.
To succeed as an entrepreneur, an individual must possess decision-making, risk-taking, and innovative thinking capabilities. Additionally, understanding and focusing on customer needs is vital for developing effective strategies. A successful entrepreneur blends these functions with a sound capital structure and strong organizational skills. By keeping these elements in mind, individuals can navigate their entrepreneurial journey and make a significant impact on society.
