What Is an Entrepreneur?

An entrepreneur is an individual who creates a new business, bearing most of the risks and
enjoying most of the rewards. The process of setting up a business is known as entrepreneurship.
The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and
business/or procedures.

KEY TAKEAWAYS

A person who undertakes the risk of starting a new business venture is called an entrepreneur.

An entrepreneur creates a firm to realize their idea, known as entrepreneurship, which aggregates
capital and labor in order to produce goods or services for profit.

Entrepreneurship is highly risky but also can be highly rewarding, as it serves to generate economic
wealth, growth, and innovation.

Ensuring funding is key for entrepreneurs: Financing resources include SBA loans and crowd
funding.

The way entrepreneurs file and pay taxes will depend on how the business is set up in terms of
structure.

Characteristics of entrepreneur

1) Creativity: Creativity gives birth to something new. For without creativity, there is no innovation
possible. Entrepreneurs usually have the knack to pin down a lot of ideas and act on them. Not
necessarily every idea might be a hit. But the experience obtained is gold.
Creativity helps in coming up with new solutions for the problems at hand and allows one to think of
solutions that are out of the box. It also gives an entrepreneur the ability to devise new products for
similar markets to the ones he’s currently playing in.

2) Professionalism: Professionalism is a quality which all good entrepreneurs must possess. An

entrepreneurs mannerisms and behavior with their employees and clientele goes a long way in
developing the culture of the organization.Along with professionalism comes reliability and
discipline. Self-discipline enables an entrepreneur to achieve their targets, be organized and set an
example for everyone.Professionalism is one of the most important characteristics of an
entrepreneur.

3) Risk-taking:A risk-taking ability is essential for an entrepreneur. Without the will to explore the
unknown, one cannot discover something unique. And this uniqueness might make all the
difference. Risk-taking involves a lot of things. Using unorthodox methods is also a risk. Investing in
ideas, nobody else believes in but you is a risk too.

4) Passion: Your work should be your passion. So when you work, you enjoy what you’re doing and
stay highly motivated. Passion acts as a driving force, with which, you are motivated to strive for
better.It also allows you the ability to put in those extra hours in the office which can or may make a
difference. At the beginning of every entrepreneurial venture or any venture, there are hurdles but
your passion ensures that you are able to overcome these roadblocks and forge ahead towards your
goal.

5) Planning:Perhaps, this is the most important of all steps required to run a show. Without
planning, everything would be a loose string as they say, “If you fail to plan, you plan to
fail.”Planning is strategizing the whole game ahead of time. It basically sums up all the resources at
hand and enables you to come up with a structure and a thought process for how to reach your
goal.The next step involves how to make optimum use of these resources, to weave the cloth of
success.Facing a situation or a crisis with a plan is always better. It provides guidelines with minimum
to no damage incurred to a business. Planning is one of the most important characteristics of an
entrepreneur.

6) Knowledge:

Knowledge is the key to success. An entrepreneur should possess complete knowledge of his niche
or industry. For only with knowledge can a difficulty be solved or a crisis is tackled.He should know
what his strengths & weaknesses are so that they can be worked on and can result in a healthier
organization.A good entrepreneur will always try to increase his knowledge, which is why he is
always a learner. The better an entrepreneur knows his playground, the easier he can play in it.

7) Social Skills: A skillset is an arsenal with which an entrepreneur makes his business work. Social
Skills are also needed to be a good entrepreneur. Overall, these make up the qualities required for
an entrepreneur to function.
Social Skills involve the following:

1. Relationship Building
2. Hiring and Talent Sourcing
3. Team Strategy Formulation

8) Open-mindedness towards learning, people, and even failure:

An entrepreneur must be accepting. The true realization of which scenario or event can be a useful
opportunity is necessary. To recognize such openings, an open-minded attitude is required.An
entrepreneur should be determined. He should face his losses with a positive attitude and his wins,
humbly. Any good businessman will know not to frown on a defeat. Try till you succeed is the right
mentality. Failure is a step or a way which didn’t work according to the plan. A good entrepreneur
takes the experience of this setback and works even hard with the next goal in line.Learning with an
open mind lets you look at your faults humbly. New information always makes an entrepreneur
question his current resolve. It also provides a new perspective towards a particular aspect. Open-
mindedness also enables you to know and learn from your competition.

9) Empathy: Perhaps the least discussed value in the world today is empathy or having high
emotional intelligence. Empathy is the understanding of what goes on in someone’s mind. This a skill
that is worth a mention. A good entrepreneur should know the strengths and weaknesses of every
employee who works under him.You must understand that it is the people who make the business
tick! You’ve got to deploy empathy towards your people.Keeping a workplace light and happy is
essential. For without empathy, an entrepreneur cannot reach the hearts of employees nor the
success he desires. Empathy is one of the most important characteristics of an entrepreneur.

10) And lastly, the customer is everything:A good entrepreneur will always know this; a business is
all about the customer. How you grab a customer’s attention is the first step. This can be done
through various mediums such as marketing and advertising.It is also important that you know the
needs of your customers. The product or service which is being created by your organization needs
to cater to the needs of your consumers. Personalising a business for consumers will also boost the
sales .It isn’t necessary that every entrepreneurial venture is a huge success. In addition to a brilliant
idea, viability is an equally important aspect of a business, which is where having a business
education can play an important role. All these characteristics of an entrepreneur can be instilled in
an individual

Function entrepreneur
1. Decision Making:The primary task of an entrepreneur is to decide the policy of production. An
entrepreneur is to determine what to produce, how much to produce, how to produce, where to
produce, how to sell and’ so forth. Moreover, he is to decide the scale of production and the
proportion in which he combines the different factors he employs. In brief, he is to make vital
business decisions relating to the purchase of productive factors and to the sale of the finished
goods or services.

2. Management Control: Earlier writers used to consider the management control one of the chief
functions of the entrepreneur. Management and control of the business are conducted by the
entrepreneur himself. So, the latter must possess a high degree of management ability to select the
right type of persons to work with him. But, the importance of this function has declined, as business
nowadays is managed more and more by paid managers.

3. Division of Income: The next major function of the entrepreneur is to make necessary
arrangement for the division of total income among the different factors of production employed by
him. Even if there is a loss in the business, he is to pay rent, interest, wages and other contractual
incomes out of the realised sale proceeds.

4. Risk-Taking and Uncertainty-Bearing: Risk-taking is perhaps the most important function of an

entrepreneur. Modern production is very risky as an entrepreneur is required to produce goods or
services in antici¬pation of their future demand.

Broadly, there are two kinds of risk which he has to face. Firstly, there are some risks, such as risks of
fire, loss of goods in transit, theft, etc., which can be insured against. These are known as
measurable and insurable risks. Secondly, some risks, however, cannot be insured against because
their probability cannot be calculated accurately. These constitute what is called uncertainty (e.g.,
competitive risk, technical risk, etc.). The entrepreneur undertakes both these risks in production.

5. Innovation: Another distinguishing function of the entrepreneur, as emphasised by Schumpeter, is

to make frequent inventions — invention of new products, new techniques and discovering new
markets — to improve his competitive position, and to increase earnings.

Definition of Entrepreneurship
Entrepreneurship is by definition the creation of new organisations( vesper)

The pursuit of opportunity without regard to the resources currently under ones control( Timmons)

The creation of a new business , the management of small business or the strategic reorientation of
an existing business , leading to significant growth and wealth creation (chrisman)

Functions of Entrepreneurship

The various functions of entrepreneurship are Innovation and creativity, Risk taking and

achievement and organization and management, Catalyst of Economic Development, Overcoming
Resistance to Change and Research. These have been depicted, at a glance, with the help of the
given Figure and are being discussed, in brief, below.

(i) Innovation and Creativity – Innovation generally refers to changing processes or creating more
effective processes, products and ideas. For businesses, this could mean implementing new ideas,
creating dynamic products or improving your existing services. Creativity is defined as “the tendency
to generate or recognize ideas, alternatives, or possibilities that may be useful in solving problems,
communicating with others. Creativity and innovation have always been recognized as a sure path to
success. Entrepreneurs think outside of the box and explore new areas for cost-effective business
solutions.

(ii) Risk taking and Achievement – Entrepreneurship is a process in which the entrepreneur

establishes new jobs and firms, new Creative and growing organization which is associated
with risk, new opportunities and achievement. It results in introducing a new product or service to
society. In general, entrepreneurs accept four types of risks namely Financial Risk, Job Risk, Social &
Family Risk & Mental & Health Risk, which are as follows:

                 (a) Financial Risk – Most of entrepreneurs begin by using their own savings and personal
effects and if they fail, they have the fear of losing it. They take risk of failure.

                 (b) Job Risk – Entrepreneurs, not only follow the ideas as working situations, but also
consider the current risks of giving up the job & starting a venture. Several entrepreneurs have the
history of having a good job, but gave it up, as they thought that they were not cut out for a job.
                 (c) Social and Family Risk – The beginning of entrepreneurial job needs a high energy
which is time consuming. Because of these undertakings, he/she may confront some social and
family damages like family and marital problems resulting on account of absence from home and not
being able to give adequate time to family.

                 (d) Mental Health Risk – Perhaps the biggest risk that an entrepreneur takes it is, the risk
of mental health. The risk of money, home, spouse, child, and friends could be adjusted but mental
tensions, stress, anxiety and the other mental factors have many destructive influences because of
the beginning and continuing of entrepreneurial activity. This can even lead to depression, when
faced with failure.

(iii) Organization and Management – The entrepreneurial organization is a simple organizational

form that includes, one large operational unit, with one or a few individuals in top management.
Entrepreneurial management means the skills necessary to successfully develop and manage a
business enterprise. A small business start-up under an owner-manager is an example of
an entrepreneurial organization. Here, the owner-manager generally maintains strict control over
business operations. This includes directing the enterprise’s core management functions. According
to Mintzberg, these include the interpersonal roles, informational roles and decision-making roles.
The smaller the organization, the more concentrated these roles are in the hands of the owner-
manager. The entrepreneurial organization is generally unstructured.

(iv) Research – An entrepreneur is a practical dreamer and does a lot of ground-work before taking a
leap in his/her ventures. In other words, an entrepreneur finalizes an idea only after considering a
variety of options, analysing their strengths and weaknesses by applying analytical techniques,
testing their applicability, supplementing them with empirical findings, and then choosing the best
alternative. It is then that he/she applies the ideas in practice. The selection of an idea, thus, involves
the application of research methodology.

(v) Overcoming Resistance to Change – New innovations are generally opposed by people because it
makes them change their existing behaviour patterns. An entrepreneur always first tries new ideas
at his/her level. It is only after the successful implementation of these ideas that an entrepreneur
makes these ideas available to others for their benefit. His/her will power, enthusiasm and energy
help him/her in overcoming the society’s resistance to change.

(vi) Catalyst of Economic Development – An entrepreneur plays an important role in accelerating

the pace of economic development of a country, by discovering new uses of available resources and
maximizing their utilization. Today, when India is a fast developing economy, the contribution of
entrepreneurs has increased multi-fold.

types of entrepreneurship:

1. Social entrepreneurship
2. Small businesses entrepreneurship
3. Scalable startup entrepreneurship
4. Intrapreneurship
5. Large company entrepreneurship
 6. Imitative entrepreneurship
7. Innovative entrepreneurship
8. Buyer entrepreneurship
9. Researcher entrepreneurship
10. Hustler entrepreneurship

01. Small business entrepreneurship: This type of entrepreneurship refers to any kind of small
business that has been created by one person, without the goal to expand or franchise. For example,
if you were planning to open a nail salon, a general store or a taco truck your goal would be to
launch a single store. You’d likely plan on hiring local employees or even family members to get your
business off the ground and would need to invest your resources directly into the business.In this
type of business, you only make a profit if your company does, meaning you need to be very driven,
responsible and committed to your vision. In 2020, there were 33.7 million small businesses in the
United States, accounting for 99.9% of companies, proving that small business entrepreneurship is
on the rise.

02. Scalable startup entrepreneurship: Rooted in the idea of changing the world, scalable startups
focus on how to create a business model that is both repeatable and scalable (more sales with more
resources). From the get go, this style of entrepreneurship begins with the hope of rapid expansion
and big profit returns. Many startups have a similar ‘garage to riches’ narrative, beginning with a
simple idea that is brought to life by the tenacity of entrepreneurs with the support of investors.
Amazon, Google and Apple are all examples of trailblazing startups that have changed the world.

03. Intrapreneurship : Unlike an entrepreneur, who is also the founder, designer and manager of a
business, an intrapreneur is a self-motivated, and action-oriented employee who thinks out of the
box and works as an entrepreneur within a company. Intrapreneurship is a way that companies can
support and encourage employees that have entrepreneurial spirit.

04. Large company entrepreneurship:Large company entrepreneurship refers to companies like

Disney, Google, Toyota, and Microsoft who have finite life cycles, as in, they keep innovating and
offering consumers new products that are variants around their core product-line.

05. Imitative entrepreneurship:Imitation is the best form of flattery, and an imitative entrepreneur
(also referred to as an adoptive entrepreneur) is one who copies what successful innovative
entrepreneurs have previously done, most often with lower financial risks and limited resources , If
you are using an imitative entrepreneurship style, in essence you are copying an idea but finding
ways to improve it. By taking note of others' mistakes and finding creative ways to make a business
better, you can become a lucrative entrepreneur.

06. Innovative entrepreneurship:Innovative entrepreneurs, as the name suggests, are constantly

trying to come up with the next big thing. If you have groundbreaking ideas of how to start a
business or specific services and products that can become business ventures, you might be an
innovative entrepreneur.
07. Buyer entrepreneurship
You’ve probably heard the saying “money makes money”, and for a buyer entrepreneur this
definitely rings true. Instead of figuring out how to raise money for a business, a buyer entrepreneur
purchases either a developing or well-established company and helps them thrive. Unlike investors,
a buyer entrepreneur is involved both financially and personally in the business, remaining active
and directly helping the investment to grow. It is not uncommon for buyer entrepreneurs to hand off
their leadership to someone else at some point, but they always maintain an active part in the
businesses they purchase.

08. Researcher entrepreneurship

Researcher entrepreneurs rely on facts, data and the belief that with the right preparation and
knowledge will be more likely to succeed. If this sounds like you, this is exactly what research
entrepreneurship is all about—a great business idea paired with academic research, and an
understanding of how to stretch limited resources to the max.

09. Hustler entrepreneurship

Don’t let the name throw you off, a hustler in business refers to a self-starter, a highly motivated
person who is driven to succeed. This type of entrepreneurship style grows directly from the
entrepreneur, who must be confident, fearless and have rigorous work ethic.If you are the type of
person who can sell anything to anyone, is always aware of the next big thing and is able to
recognize opportunities, you might just be a hustler after all.

10. Social Entrepreneurship

Social entrepreneurs are innovators whose main goal is to create products and services that both
benefit the world, and make money. Social entrepreneurship relates to nonprofit, for-profit, or
hybrid companies that are committed to social or environmental change. Some examples include
educational programs, microfinance institutions, and companies that provide banking services in
undeveloped countries.

Difference
Role of entrepreneurship economic Development
1. Wealth Creation and Sharing: By establishing the business entity, entrepreneurs invest their own
resources and attract capital (in the form of debt, equity, etc.) from investors, lenders and the public.
This mobilizes public wealth and allows people to benefit from the success of entrepreneurs and
growing businesses. This kind of pooled capital that results in wealth creation and distribution is one
of the basic imperatives and goals of economic development.

2. Create Jobs: Entrepreneurs are by nature and definition job creators, as opposed to job seekers.
The simple translation is that when you become an entrepreneur, there is one less job seeker in the
economy, and then you provide employment for multiple other job seekers. This kind of job creation
by new and existing businesses is again is one of the basic goals of economic development. This is
why the Govt. of India has launched initiatives such as StartupIndia to promote and support new
startups, and also others like the Make in India initiative to attract foreign companies and their FDI
into the Indian economy. All this in turn creates a lot of job opportunities, and is helping in
augmenting our standards to a global level.

3. Balanced Regional Development: Entrepreneurs setting up new businesses and industrial units

help with regional development by locating in less developed and backward areas. The growth of
industries and business in these areas leads to infrastructure improvements like better roads and rail
links, airports, stable electricity and water supply, schools, hospitals, shopping malls and other public
and private services that would not otherwise be available.

Every new business that locates in a less developed area will create both direct and indirect jobs,
helping lift regional economies in many different ways. The combined spending by all the new
employees of the new businesses and the supporting jobs in other businesses adds to the local and
regional economic output. Both central and state governments promote this kind of regional
development by providing registered MSME businesses various benefits and concessions.

4. GDP and Per Capita Income: India’s MSME sector, comprised of 36 million units that provide
employment for more than 80 million people, now accounts for over 37% of the country’s GDP. Each
new addition to these 36 million units makes use of even more resources like land, labor and capital
to develop products and services that add to the national income, national product and per capita
income of the country. This growth in GDP and per capita income is again one of the essential goals
of economic development.

5. Standard of Living: Increase in the standard of living of people in a community is yet another key
goal of economic development. Entrepreneurs again play a key role in increasing the standard of
living in a community. They do this not just by creating jobs, but also by developing and adopting
innovations that lead to improvements in the quality of life of their employees, customers, and other
stakeholders in the community. For example, automation that reduces production costs and enables
faster production will make a business unit more productive, while also providing its customers with
the same goods at lower prices.

6. Exports: Any growing business will eventually want to get started with exports to expand their
business to foreign markets. This is an important ingredient of economic development since it
provides access to bigger markets, and leads to currency inflows and access to the latest cutting-
edge technologies and processes being used in more developed foreign markets. Another key
benefit is that this expansion that leads to more stable business revenue during economic
downturns in the local economy.  

7. Community Development: Economic development doesn’t always translate into community

development. Community development requires infrastructure for education and training,
healthcare, and other public services. For example, you need highly educated and skilled workers in
a community to attract new businesses. If there are educational institutions, technical training
schools and internship opportunities, that will help build the pool of educated and skilled workers.

A good example of how this kind of community development can be promoted is Azim Hashim
Premji, Chairman of Wipro Limited, who donated Rs. 27,514 crores for promoting education through
the Azim Premji Foundation. This foundation works with more than 350,000 schools in eight states
across India.

So, there is a very important role for entrepreneurs to spark economic development by  starting new
businesses, creating jobs, and contributing to improvement in various key goals such as GDP,
exports, standard of living, skills development and community development.
8.Adding to local business development: Apart from creating jobs and bringing wealth on a local
level, entrepreneurs are also opening up the way for more businesses to open up. As a result, they
are adding to the local business development and well as balance out the difference between big
companies and small local shops.