Entrepreneurs are persons who are creative and imaginative in finding ways and add them to their own wealth, power and prestige. Entrepreneurs innovate and introduce new quality of good which consumers are not familiar yet. Besides, they often launch new method of production and new market which have not been tested and existed before yet. Moreover, they also bring new source of supply of raw material or half manufactured goods. Likewise, they create monopoly position which is the carrying out of the new organisation of any industry.
It is important to differentiate between two primary types of entrepreneurs to understand how economic development occurs. âThe initiation entrepreneurâ is responsible for unprecedented economic growth during 19th and 20th centuries; creating new products, new productive technologies or procedures which has not existed before. Whereas âthe imitative entrepreneurâ is for economic advancement in developing countries today, where there is a more widespread and occurs after initiating have successfully demonstrated the utility of their innovation product or process.
Entrepreneurs take part in economic tasks that increase employment, create new organisation and perform other business activities. Entrepreneurs examine situational or contextual factors such as socio-economic structures and influence the wider economy by enterprising culture in the locality.
Importantly, the benefits of a business venture that would occur when an owner launches a new business should be considered. Entrepreneurs create an opportunity for themselves. Likewise, Entrepreneurship, a perfect opportunity for business owners to contribute to society, creates the benefit for the owner of a particular business to make a difference which happens through opportunities that are crucial to the owner.
Significantly, Entrepreneurs observe the limited natural resources effectively and combine their concerns with social issues. Besides, Entrepreneurs inaugurate a market potential for their innovation and lead customers and sell the venture to investors. Entrepreneurs have the ability to recognize new knowledge to exploit new products and technology including knowledge of customer problems and knowledge of technology known as âEntrepreneurial opportunityâ. Therefore, this opportunity may lead to better understanding of the new knowledge or technology for innovation.
Drawbacks in Entrepreneurship
Even though innovations create the new opportunities, radical or âdisruptiveâ innovations could be occurred the industries into a higher risk. Entrepreneurs possess personal traits and behaviors which could harm their roles as managers or workers. Thus, Entrepreneurs are often known as risk takers. Since, the new productâs demand, the activities of the competitors and government interventions are not overwhelmed by the Entrepreneurs, they sometimes need to manage the risk and make a right decision for the uncertainties. Thus it is crucial for owners to establish a particular business activity although they sometimes create drawbacks in entrepreneurship due to the following reasons.
1. Life cycle of the business venture
The stages of entrepreneurial development can sometimes fail due to the life cycle of the business venture. Entrepreneurs can only harvest in the pre-start up stage, because they have competition with other industry. This competition creates potential threat which they could not resist therefore; they buy the patent to protect their business. In the start-up stage, Entrepreneurs face with an increasing risk and potential for business failure because market demand is not very certain and the profits are less. Nevertheless, most Entrepreneurs are likely to harvest and sell the venture based on the current performance in the growth stage. However, in maturity stage, sales and profits decline and there are many competitive pressures in the distribution elements. Finally, during the decline stage, sales and profit decrease rapidly due to the poor strategic positioning in business prospect of Entrepreneurs.
Since Entrepreneurs cannot classify and distinguish new process opportunities, most of them do not retain chances along with the technology changes.
2. The failure of new small firms
Most entrepreneurs are creative and they process new ventures. Albeit, not all the entrepreneurs create the ventures and they are not managed by the entrepreneurs. However, the most common reasons of the failure of the new ventures are because of the managerial incompetence, nonexistence of experience, low financial control, absence of strategic management, incorrect or inappropriate place, having not enough inventory control and failure to create the entrepreneurial transitions or changes. Starting up business requires a great deal of dedication and discipline therefore, in order to build a successful business; entrepreneurs might face many various obstacles which become impossible.
3. Making wrong decisions
A manager could not have detailed knowledge of probabilities of what might happen in the future, thus a decision could become uncertain. Thus, they might accept various rules according to minimize their greatest loss or maximize their least return. Moreover, sometimes the decisions could become ambiguity where it sandwiches between uncertainty and risk which has indefinite chance.
4. Poor quality of the analysis for Business plan
Importantly, meeting a clear business document plays a vital role in organisations. Nowadays, most Entrepreneurs face with some difficulties when setting a business plan for creating poor quality ones. Further, business plans are not describe back even though Entrepreneurs get funding through achievements. Thus, the opportunities become failure while occurring to the business to alter according to its environment. Additionally, there should be not only clear mission statement but also precise objectives in the business. The reasons why Entrepreneurs fail today are not because of unclear business plan but because of uncertain goals and mission statements for their business.
Without the following facts, a business would not meet its mission statement. One reason might be due to the absence of unique sales proposition (USP) that creates consumers to buy from the business and differentiates a business from its competitors. Additionally, Entrepreneurs create a poor mission statement; long and confused to remember and not setting a clear one which is easy to memorize. That is why; neither customers and the staff nor themselves can recall their memory but fail to meet businessâs goals and aims.
5. A range of Ethical problems
Entrepreneurs encounter ethical problems that are dissimilar from other business men because they introduce new technology and innovate business techniques that they are the first to encounter new ethical dilemmas where the demand of innovations could be complex in Entrepreneurial environments. There is an abundance of opportunity for low-order Entrepreneurship because so many basic needs are unsatisfied in developing countries. In addition, the Australian economist Joseph Schumpeter outlines that Entrepreneurship creates and destroys economic structures in the economy.
Entrepreneurship demonstrates âstronger ethical perceptionsâ about their relationship to the businesses in which they were involved. Entrepreneurs are stricter in sometime when they do ethical judgments. Thus, personal characteristics of individual Entrepreneur affect the ethical perspectives and business decision. Entrepreneurs both inside and outside of organisation are required to manage othersâ viewpoints and to resolve moral conflicts. The competitive market pressures will harm Entrepreneurâs viewpoints on ethics.
Entrepreneurs usually encounter âpromoter dilemmasâ because they must win the customers, investors, bankers, suppliers to support the risks and uncertainties of the new enterprise. Promoter dilemmas include uncertainty over how much detailed information to convey about the risks of a venture. Moreover, Entrepreneursâ great optimism and enthusiasm may limit his/ her ability to distinguish and make judgments about potential ethical problems. Additionally, Entrepreneurial innovations can bring complex negative externalities that may need society to re-examine certain norms and values.
6. Legal considerations
There are a lot of challenges from different legal and regulatory environments. In order to handle the going international, an Entrepreneur needs to have not only an overall intelligence of legal system of the country but also a legal counsel to handle specifics. If they have lack of understanding of intellectual property, they might be unable to remember and protect the assets such as patents, trademarks and copyrights. Furthermore, they must understand taxes, liability and interest in the particular country and aware any regulations that might affect the new venture.