Entrepreneurship: The process of initiating a business venture, organizing the necessary resources, and assuming the risks and rewards.
Of the many definitions of entrepreneurship, some apply the term to the creation of any new business. Other definitions focus on intentions, claiming that entrepreneurs seek to create wealth, which is different from starting businesses merely as a means of income substitution (that is working for your self rather than working for someone else). When most people describe entrepreneurs, they use adjectives such as bold, innovative, initiative taking, venturesome, and risk taking. They also tend to associate entrepreneurs with small businesses. We will define entrepreneurship as a process in which an individual or a group of individuals risks time and money in pursuit of opportunities to create value and grow through innovative regardless of the resources hey control. The three important themes in this definition are (1) the pursuit of opportunities, (2) innovation, and (3) growth. Entrepreneurs pursue opportunities to grow a business by changing, revolutionizing, transforming or introducing new products or services.
Many people believe that entrepreneurial activities and small business are one and the same, but they are not. There are some key differences between the two. Entrepreneurs create entrepreneurial ventures – organizations that pursue opportunities, are characterized by innovative practices, and have growth and profitability as their primary goals. A small business, on the other hand, is one that is independently owned, operated, and financed; has fewer than 500 employees; doesn’t necessarily engage in any new or innovative practices; and usually has relatively little impact on its industry. A small business isn’t necessarily entrepreneurial because it’s small. To be entrepreneurial means to be innovative and seek out new opportunities. Even though entrepreneurial ventures may start small, they pursue growth. Some new small firms may grow, but remain small business by choice or by default.
Like most entrepreneurs, Michael Dell, the founder of Dell Inc, searches for change, responds to it, and then exploits the opportunity. In China, for example, Dell specifically designed a new, low cost computer that enables large numbers of novices to get online. Pursuing the opportunity of a new market by offering an innovative product keeps Dell Inc on its successful path of growth.
What is the Entrepreneurial process?
What’s involved in the entrepreneurial process? Entrepreneurs must address four key steps as they start and manage their entrepreneurial ventures. The first of these steps is exploring the entrepreneurial context. The context includes the realities of he new economy, society’s laws and regulations that compose the legal environment and the realities of the changing world of work. It’s important to look at each of these aspects of the entrepreneurial context because they determine the “rules” of the game and what decisions and actions are likely to meet with success. Also, it’s through exploring the context that entrepreneurs confront that next critically important step in the entrepreneurial process – identifying opportunities and possible competitive advantages. We know from our definition of entrepreneurship that the pursuit of opportunities is an important aspect. Once entrepreneurs have explored the entrepreneurial context and identified opportunities and possible competitive advantages, they must look at the issues involved in actually bringing their venture to life. Therefore, the next step in the entrepreneurial process is starting the venture. Included in this phase are researching the feasibility of the venture and planning, organizing and launching the venture. Finally once the entrepreneurial venture is up and running, the last step in the process is managing the venture, which an entrepreneur does by managing processes, people, and growth.
Describing what entrepreneurs do isn’t an easy or simple task. No two entrepreneurs’ work activities are exactly alike. In a general sense, entrepreneurs are creating something new, something different. They’re searching for change, responding to it and exploiting it.