Entrepreneurship is the oldest form of business organization in the world. In fact, the concept of entrepreneurship is believed to be born in the 1700’s! Over time it has evolved to keep up with the changes in our world. Let us learn about the Four Key Elements of Entrepreneurship.
Concept of Entrepreneurship
Before proceeding further, let us first understand the concept of entrepreneurship and its importance to the economy. An entrepreneur is the sole owner and manager of his business. Actually, the word translates to “the one who undertakes” in French.
From an economics point of view, an entrepreneur is the one who bears all the risk of a business. And in return, he gets to enjoy all of the profits from the business as well. While understanding the concept of entrepreneurship we will also learn about the importance of entrepreneurs in the economy. They bring in new goods, services, technologies, etc. to the market.
Four Key Elements of Entrepreneurship
After having studied the concept of entrepreneurship, now let us look at some key elements that are necessary for entrepreneurship. We will be looking at four of the most important elements.
Browse more Topics under Introduction To Entrepreneurship
- Traits and Characteristics of an Entrepreneur
- Benifits of Entrepreneurship
- Types of Entrepreneurs
- Entrepreneurs vs Managers
An entrepreneur is the key source of innovation and variation in an economy. It is actually one of the most important tools of an entrepreneurs success. They use innovation to exploit opportunities available in the market and overcome any threats.
So this innovation can be a new product, service, technology, production technique, marketing strategy, etc. Or innovation can involve doing something better and more economically. Either way in the concept of entrepreneurship, it is a key factor.
Entrepreneurship and risk-taking go hand in hand. One of the most important features of entrepreneurship is that the whole business is run and managed by one person. So there is no one to share the risks with.
Not taking any risks can stagnate a business and excessive impulsive risk-taking can cause losses. So a good entrepreneur knows how to take and manage the risks of his business. But the willingness of an entrepreneur to take risks gives them a competitive edge in the economy. It helps them exploit the opportunities the economy provides.
Vision or foresight is one of the main driving forces behind any entrepreneur. It is the energy that drives the business forward by using the foresight of the entrepreneur. It is what gives the business an outline for the future – the tasks to complete, the risks to take, the culture to establish, etc.
All great entrepreneurs of the world that started with an entrepreneurship business are known to have great vision. This helps them set out short term and long term goals for their business and also plan ways to achieve these objectives.
In entrepreneurship, it is essentially a one-man show. The entrepreneur bears all the risks and enjoys all the rewards. And sure he has the help of employees and middle-level management, yet he must be the one in ultimate control. This requires a lot of organization and impeccable organizational skills.
An entrepreneur must be able to manage and organize his finances, his employees, his resources, etc. So his organizational abilities are one of the most important elements of entrepreneurship.
Know the Benefits of Entrepreneurship
Solved Question on Concept of Entrepreneurship
Q: Entrepreneurship is a
- None of the above
Ans: The correct answer is C. Peter Drucker has famously said that entrepreneurship is not an art or a science. In fact, it is a knowledge-based practice that provides a means to an end.